avon pension fund annual report 2018/2019 · avon pension fund annual report 201819 3. review of...

Avon Pension Fund

Annual Report 2018/2019

INTENTIONALLY LEFT BLANK

AVON PENSION FUND ANNUAL REPORT 2018/19 1

Contents

Chairman’s Foreword, Page 2Review of the Year 2018/19, Governance and Management Structure, Page 6Fund Governance, Page 7Risk Management, Page 11Pensions Administration & Communications, Page 15Pooling Of Assets – Analysis Of Costs & Savings, Page 21Investment, Page 25Funding Strategy, Page 33Statement of the Consulting Actuary, Page 35Employer Contribution Rates, Page 38Statement of Accounts 2018/19, Page 48Statement of Responsibilities for Avon Pension Fund Account, Page 86Auditor’s Report, Page 87Summary of Financial Statistics, Page 88Pension Increase, Page 91Contacts, Page 92Glossary of Terms, Page 93Appendices, Page 95

2 AVON PENSION FUND ANNUAL REPORT 2018/19

I would like to start by thanking our committee, many of whom stepped down in May 2019, for their commitment and hard work over the last four years. Much has been achieved to ensure that the Fund is well placed for the future. They oversaw the immensely challenging project to pool our investment assets, agreed the strategy to automate and digitalise our administration activities and the resource budget to deliver, implemented the risk management framework across our asset portfolio and focussed the investment strategy towards low carbon and renewable energy investments.

Ahead of the 2019 triennial valuation, significant preparatory work has been undertaken especially to cleanse the membership data which will ensure the pension liabilities are correctly calculated. With 418 employers, nearly half of whom have less than 20 members, data quality is a key priority with significant resources applied to this aspect of the Fund’s

activities. To this end, the project to receive monthly electronic data has met key milestones with 254 employers, responsible for 85% of members, now submitting monthly electronic returns (as at 31 March 2019).

The 2018 interim valuation indicates that the funding deficit has improved significantly since contributions were last set in 2016. This is due to strong investment returns of 8.9% per annum over the last three years giving an asset value of £4.8bn. The outlook however is for less robust returns in the next three years given current market prices and yields. This will put pressure on future service contribution rates, offsetting some of the improvement in the deficit. A review of the investment strategy will be undertaken in 2019/20 to make sure the Fund is able to fund its pension liabilities in a lower return environment and consider further investment opportunities so that the portfolio is better aligned with the transition to a low carbon economy.

2018/19 was a significant year for the pooling of our investment assets within Brunel Pension Partnership. Following authorisation from the Financial Conduct Authority in March 2018 for Brunel to provide services to its clients, a number of portfolios were established during the year and Avon Pension Fund had transitioned around £736m of assets by year end. Management fee savings achieved to date are ahead of those assumed in the Business Case for pooling. Momentum continues in the current

year with at least another three investment mandates transitioning to Brunel. This partnership will not only generate savings in investment management costs but also enable more efficient implementation of our investment strategy and the potential for superior net returns. The Fund still retains full responsibility for setting its own investment strategy and the governance arrangements within the pool ensure that Brunel delivers to the requirements set out in the Services and Shareholder Agreements.

The Local Pension Board, which provides an oversight role to ensure the Fund complies with its legislative obligations, held four formal meetings during the year. The Board’s fourth year of operation focussed on its statutory responsibilities with a core agenda of key themes around the fund’s legal compliance, risk management and benchmarking. The Board’s fourth annual report is included with this report.

Finally on behalf of the Committee, I would like to thank the staff at the Avon Pension Fund for their contribution towards delivering an excellent service throughout the year.

Tony Bartlett

Head of PensionsBath and North East Somerset Council

Foreword


Review of the year 2018/19

POOLING OF ASSETS

Since 2015 when the government announced that the assets of the Local Government Pension Scheme (LGPS) funds should be pooled to reduce costs and increase the capacity across the LGPS to invest in infrastructure, the Avon Pension Fund (the Fund) has been participating in the Brunel Pension Partnership Ltd (Brunel), a collaboration of 10 LGPS funds (the “clients”). Under these new arrangements, the Avon Pension Fund retains responsibility for setting its investment strategy (or asset allocation), as well as the funding and administration strategies. Brunel is responsible for ensuring each fund can implement its bespoke investment strategy via a suite of portfolios that it will offer all its clients. Following Brunel receiving authorisation from the FCA to operate in March 2018, significant progress has been made during the year to establish the investment portfolios and begin the transition of client assets to Brunel.

In addition, the assurance framework, through which the client funds monitor the service provided by Brunel and the performance of each of the portfolios, has been developed and gradually rolled out as assets have transitioned.

Included in this Annual Report is a summary of the costs of pooling and the savings achieved to date. This will be updated annually in line with regulatory guidance and includes the savings against the assumptions in the 2016 Business Case. In 2018/19 fee savings were achieved on the assets that transferred. However, the costs associated with setting up Brunel and transitioning the assets to date means the Fund has incurred net costs of £2.6

million, which is lower that the costs anticipated in the business case to establish the pool. The Fund is not expected to show a net saving until financial year 2024.

INVESTMENTS

During the year the value of the During the year the value of the Fund’s assets increased by £211 million to £4,819 million at 31 March 2019. The investment return was 5.2% with a return over the last three years of 8.9% per annum which exceeds the return required in the funding plan.

The investment return was primarily due to solid performance from US equities with less strong returns from UK, European and Emerging markets. Equity markets were more volatile during the year driven by tensions over trade and expectations of higher interest rates as a result of rising economic growth especially in the US.

Most asset classes within the Fund generated positive returns, especially property and infrastructure. Other alternative assets such as hedge funds and multi asset credit had more subdued returns. Over the year sterling depreciated against the US dollar and Yen but appreciated against the Euro. As a result, the currency hedge contributed negatively to the overall return. Excluding the foreign currency hedge the returns were 6.5% over one year and 9.7% per annum over three years.

With no major changes to the investment strategy the main focus was the transfer of assets from the incumbent managers into the pool, to be managed by Brunel. The passively managed Low Carbon Global Equities and one of the UK Equity mandates transitioned to Brunel’s portfolios during the year. At least another three mandates will have transitioned by the end of the

current financial year. In addition, our new allocations to Secured Income and Infrastructure assets are being invested via Brunel’s portfolios.

The Investment Strategy will be reviewed in 2019/20, taking into account the improvement in the funding level and assessing the appropriate level of risk that is still required to fund the pension liabilities over time.

During the year further progress was made to align the portfolio with a low carbon economy by committing £115m to renewable infrastructure funds. This builds on the allocation to passively managed Low Carbon Global equities made in 2017/18. In addition, once again the Fund measured its carbon and environmental footprint so that it understands its exposure to the risks arising from climate change and other environmental factors. This analysis will be used when considering the financial impact of climate change on the asset portfolio in the upcoming investment review.

FUNDING STRATEGY

The funding level at 31 March 2019 is estimated to be largely unchanged at 96%. The improvement in the funding position since the 2016 actuarial valuation has been largely driven by the strong asset return of c. 29% over the three years. This provides a positive context for the 2019 valuation. An interim valuation was undertaken during the year to enable the Fund and employers to plan for the new contribution rates that will be implemented from 1 April 2020.

The Government has recently lost a legal case regarding the changes to the public sector pension schemes in 2015. This is known as the ‘McCloud case’. Some of the changes implemented are deemed


to be age discriminatory and will need to be reversed. At this stage it is not known how the LGPS will be rectified as it means the overall cost of the scheme will be higher than assumed in 2014 when the current scheme structure was agreed. The estimated impact of this ruling on the Fund’s liabilities is £40 million, assuming all active members are affected by the ruling and there are no offsetting changes to scheme benefits.

However, the LGPS has a cost cap process to ensure the costs of the scheme remains within a prescribed cost ‘envelope’ for both member and employers. The initial results of the cost management process indicates a slight improvement in member benefits are required with effect from 1 April 2019; however these changes remain on hold until the outcome of the McCloud case is known and the impact on the cost of the scheme.

PENSIONS ADMINISTRATION

Progress on work to complete a number of strategic projects previously identified as key requirements to support delivery of business service objectives across both Employer and Member Services teams continued during the year. A summary of the key projects are listed below:-

Employer Services

• Roll out of monthly IConnect returns across the whole employer platform to enable 100% automated monthly data receipt. As at 31st March there were 254 employers supplying automated monthly data returns to the Fund representing 85% of active scheme membership. A further 182 employers are in train to be automated by 31st March 2020.

• Member address tracing project – bulk exercise to identify all missing or ‘gone away’ member addresses to achieve compliance with TPR requirements. As at 31st

March approximately 2/3rds of all cases submitted for tracing had been identified. Further work is underway to explore the possibility of a deeper forensic test against those cases that remain outstanding.

Member Services

• To address the aggregation backlog of approximately 4,000 cases. This project was completed in February 2019 ensuring that ABS statements issued for 2018/19 accurately reflect member service and account position. All new cases are picked up within the ‘business as usual’ process.

Pensions Administration Strategy

Following consultation with employers the Fund has now revised its 2015 Administration Strategy to include a more detailed ICT Strategy and also to ensure the governance and administration requirements of the Pension Regulator are properly addressed as they fall to the Fund and Employers.

The purpose of the revised Administration Strategy is to continue progress towards a seamless pension service, employing appropriate technology and best practice which both significantly improve the quality of information and the speed with which it is processed, to provide better information for Employers and stakeholders and a more efficient service to Fund members.

The Strategy recognises that significant work will need to continue to be undertaken in achieving the Pension Regulator’s compliance requirements and both the Fund and its Employers will need to work in partnership to meet this challenge.

Key to the success of the Strategy are the continued development of the IT Strategy proposals which will deliver high quality, efficient and integrated digital services to employers and members in an

increasingly regulated and financially complex environment. Performance targets for both Employers and the Fund reflecting the Pensions Regulator’s requirements have been reflected in revised Service Level Agreements and agreed with Employers. Performance reporting will continue to be discussed with Employers at regular Performance / SLA review meetings and similarly reported to the Pensions Committee and Local Pension Board.

Poor performance by an employer would be flagged by these reports and the review meetings will enable Employers and the Fund to work together to resolve any problem areas and to improve performance. Where the Fund identifies poor quality or missing data it will put a data improvement plan in place to address these issues. Continued failure to improve may result in penalty charges being imposed.

The Pension Board will undertake to assist the Fund in the implementation of the Administration Strategy, making recommendations to the Committee as necessary.

Service Plan 2019/22

The forward looking three year Service Plan 2019/22 sets out the key service objectives and milestones. It also reviews the achievement against the previous year’s plan. The main focus of the plan is:

• To work with Brunel Client Group and Brunel to ensure efficient transition of assets and full consideration of investment, financial and governance issues. Ensure Committee and Board kept up to date of progress

• To continue implementation of the IT strategy to achieve a digital step change in service delivery and to mitigate service demand growth.

• To undertake the 2019 triennial valuation and to review funding strategy and implications for investment strategy.

• To develop and introduce a


chargeable services brochure for employers where there is continued failure to meet the agreed service standards or in circumstances when additional assistance is required outside the standard Service Level Agreement.

The Pensions Regulator – Code of Practice 14

The Pension Regulator’s (TPR) Code of Practice 14 and the Public Service Pensions (Record Keeping & Miscellaneous Amendments) Regulations 2014 set out the requirements for public sector pension funds to maintain comprehensive and accurate data on their members and their member’s pension contributions. The Fund has undertaken a detailed review of its core data and processes and assessed its level of compliance with regulation requirements in respect of:

• Scheme record keeping• Maintaining contributions• Providing information to

members

The regulations require 100% completeness of data across a number of core areas. On a quarterly basis the Fund undertakes a series of analytical tests against the total membership to measure the overall level of completeness of data accuracy. Measurements tested against both Core and Scheme Specific data across the total scheme membership as at 31st March 2019 demonstrated an overall data score of 95.01%. A data improvement plan has been developed to address the issues of non-compliance identified.

The Local Government Association (LGA) in association with TPR have now produced specific requirements for scoring against scheme specific data. Accordingly, the data improvement plan will be further reviewed and updated in 2019/20 to reflect any changes.

To ensure continued compliance the

Fund has also undertaken to review its existing procedures relating to the monitoring of late payment of monthly contributions from employers and its Internal Dispute Resolution Procedure (IDRP).

Detailed reports on compliance and the data improvement plan are presented to both Pensions Committee and Local Pensions Board on a quarterly basis.

LGPS Cost Transparency

Historically the investment management fees, direct transaction costs and custody fees have been included in the Statement of Account. However, this understates the investment costs as it excludes other costs incurred in the management of pooled funds. To remedy this, LGPS funds are now required to disclose the ‘full’ investment costs in their Annual Report from 2018/19 in order to assess value for money. It should be noted that this does not affect asset values and performance data which are reported net of all costs.

To ensure transparency, consistency and to encourage investment managers to provide the information, a voluntary Code of Transparency framework (‘the Code’) has been established. Delays in publishing the standard disclosure templates enabling investment managers to provide consistent data have meant that the disclosure for 2018/19 does not include all the Fund’s assets, specifically for alternative and private market assets; it is expected that more of managers will comply with the Code in the future. Brunel is a signatory to the Code and will require all the managers it appoints to comply with the Code.

After taking the full costs into account, the investment costs equate to 0.70% of the Fund’s assets.

GOVERNANCE

Local Pension Board

The LPB has reviewed a wide range of LGPS regulations and TPR requirements and made a number of recommendations to the administering authority.

This has included a review of all administration processes against their legal timeframes, reviewing high level of risks facing the Fund on a regular basis, analysing key issues around data quality – notably missing addresses - and reviewing the refreshed statutory Investment Strategy Statement (ISS) for its compliance against the DCLG statutory guidance.

In addition the LPB have received the outcome of the annual compliance check from Internal Audit in relation to the funds compliance with TPR Code of Practice 14 along with a number of other audit reviews of the fund and its administration. The LPB welcomed the actions being implemented by the fund to ensure it fully complies with the Code and improve the control framework around the Administration of the Fund.

The LPB noted the growing administration pressures from more employers joining the fund as well as new TPR requirements in respect of record keeping and data quality. In light of this the LPB supported the need to future proof the level and quality of administration services to fund members in the forthcoming review of the fund’s administration strategy.

The LPB also continues to overview the Fund’s communication strategy and stressed the need for all scheme information to be kept up to date and the importance of the fund website to employers and members.

The LPB annual report is set out in Appendix A


Administering Authority:

Bath & North East Somerset Council

Members of the Avon Pension Fund Committee:

Councillor David Veale (Chair) Bath & North East Somerset Council

Councillor Patrick Anketell-Jones Bath & North East Somerset Council

Councillor Rob Appleyard Bath & North East Somerset Council

Paul Scott (Left April 2018) Independent Trustee

Councillor Mary Blatchford North Somerset Council

Pauline Gordon (started September 2018) Independent Member

Councillor Toby Savage South Gloucestershire Council

William Liew University of the West of England

Shirley MarshIndependent Trustee

Councillor Lisa O’Brien Bath & North East Somerset Council

Councillor Steve PearceBristol City Council

Councillor Shaun Stephenson-McGallBath & North East Somerset Council

Wendy WestonGMB

Non-voting Members:

Cheryl KirbyParish & Town Councils

VacantUnite

Richard OrtonUnison

Members of the Local Pension Board:

Howard Pearce Independent Chair

Gaynor Fisher Employer Representative

Steve Harman Employer Representative

Tony Whitlock Employer Representative

David Yorath Member Representative

Tom Renhard Member Representative

Mark King Member Representative

Independent Investment Advisor:

Tony Earnshaw

Council Officers:

Donna ParhamInterim Director, Finance

Tony Bartlett Head of Business Finance & Pensions

Liz WoodyardInvestments Manager

Geoff CleakPensions Manager

Maria Lucas Head of Legal and Democratic Services

External AuditorGrant Thornton

Asset Pool Brunel Pension Partnership

Governance & Management Structure as at 31 March 2019

Investment Managers:

Actuary: Legal Advisor: Bankers: AVC Providers:

Investment Consultant: Global Custodian:


Avon Pension Fund Committee

As administering authority, Bath and North East Somerset Council (the Council), has legal responsibility for the pension fund as set out in the Local Government Pension Scheme Regulations.

The Council has delegated responsibility for the Fund to the Avon Pension Fund Committee (the Committee) which is the formal decision-making body for the Fund. The Committee’s role is strategic in nature, setting policy framework and monitoring implementation and compliance within that framework. Due to the wide scope of the Committee’s remit it is supported by the Investment Panel (the Panel) which considers the investment strategy and investment performance in greater depth. The Committee has delegated authority to the Panel for specific investment decisions.

The Terms of Reference, agreed by the Council, for the Committee and Panel are set out in Appendix B.

The Committee meets formally each quarter. In 2018/19 training workshops took place before the Committee meetings on Legal Framework, Risk Management and Brunel Portfolios. In addition an internal workshop covering the interim valuation took place.

The Avon Pension Fund Committee has undertaken a review of its governance structure following changes to its employer composition and legal requirements relating to its investor status. In addition the introduction of asset pooling and creation of Brunel Pension Partnership needed to be included in the governance arrangements.

The revised arrangements of an Academy representative and an additional independent member were agreed by Council following consultations with Employers and the Avon Pension Fund Board. The changes are designed to ensure the Committee remains representative of its employers and members, retains its status as a Professional Investor whilst still enabling it to operate efficiently. Further, the governance in respect of the dual accountability of Brunel Pension Partnership to the Council as Shareholder and the Avon Pension

Fund as client will be strengthened with a sub group overseeing this important relationship.

Investment Panel

The Committee is supported by an Investment Panel which considers the investment strategy and investment performance in greater depth. The Committee has delegated authority to the Panel for specific investment decisions;

strategic issues are referred to the Committee. The Panel consists of up to six voting members of the Committee.

The Panel met formally four times during the year and met with selected managers at dedicated workshops where managers presented on their performance and outlook for their portfolio.

The Committee is supported by a number of external advisors; Mercer Limited advised on all actuarial and investment aspects of the fund (under separate contracts); Osborne Clarke provided legal advice on investment and funding issues.

The Committee, Fund Officers, external advisors, fund managers and administrators all operate in accordance with the relevant regulations namely the Local Government Pension Scheme Regulations 2013, the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016, CIPFA Codes and the Pensions Regulator Codes of Practice.

Local Pension Board (LPB)

The Board was established in 2015 arising from the Public Sector Pension Act 2013 and Local Government Pension Scheme (Governance) Regulations 2015.

The purpose of the Board is to assist the administering authority (Bath & North East Somerset Council) of the Avon Pension Fund secure compliance with the LGPS regulations and requirements of the Pensions Regulator (TPR) and ensure efficient and effective governance and administration of the fund.

The Terms of Reference for the LPB are set out in Appendix C

Training

The administering authority

Fund Governance

Voting members (14): 5 elected members from Bath & North East Somerset Council 3 independent members3 elected members nominated from the other West of England unitary councils1 nominated from the Higher/Further Education bodies1 nominated from Academy bodies1 nominated by the Trades Unions

Non-voting members (4):

1 nominated from the Parish Councils 3 nominated from the Trades Unions

Table 1: Committee Structure


recognises the importance of training, both for Committee members, Local Pension Board and pension fund staff responsible for financial management and decision making within the Fund. Training is provided to ensure committee members, LPB and staff, possess an appropriate level of knowledge, skill and understanding to carry out their duties.

Specifically the administering authority must ensure:

• that decisions are taken by persons or organisations with the skills, knowledge advice and resources necessary to make them effectively monitor implementation; and

• those persons or organisations have sufficient expertise to be able to evaluate and challenge the advice they receive, and manage conflicts of interest.

The Fund has in place a formal training framework which is based on CIPFA’s (Chartered Institute of Public Finance and Accounting) Knowledge and Skills Framework for LGPS funds. This framework is used to assess the training needs and draw up the annual training plan. The Strategic Director - Resources is responsible for ensuring that training is implemented.

Committee Training

Committee training is delivered in a variety of formats, reflecting the strategic importance of the subject matter to the Committee’s agenda and the differing level of knowledge and understanding across the Committee. Much of the training is delivered through detailed committee reports and workshops where the topic is explored greater in detail.

In addition, Committee members and staff are encouraged to attend seminars and conferences which broaden their understanding of investments and topics of relevance to the LGPS. New committee members are encouraged to attend the Fundamentals Training Courses offered by the Local Government Pension Committee and induction sessions arranged by officers. All Committee members are encouraged to complete the Pension Regulator’s public sector pension online toolkit. Officers’ annual performance review identifies any training needs as well as monitoring individual performance against objectives.Local Pension Board Training

During the year on-going technical training was provided to LPB members by officers or advisors to the Fund on a full range of topics covering the LGPS framework and

TPR requirements.

All 7 members of the LPB have completed the TPR public sector pension toolkit certification. In addition three members attended the LGPC Fundamentals Training Course.

The LPB training plan is a topic at each board meeting and all Board Members maintain a training log, which is also submitted annually to assist in the identification of on-going training needs.

Governance Compliance Statement

The Fund is required under the regulations to publish a Governance Compliance Statement which demonstrates the extent to which the Fund complies with best practices in pension fund governance. The Fund’s latest statement was approved by the Avon Pension Fund Committee in June 2019. The statement shows a high level of compliance with best practice and is summarised in Table 5.

The latest Governance Compliance Statement is included as Appendix B and can also be obtained from the Fund’s website www.avonpensionfund.org.uk (search Governance Compliance Statement).

Committee Investment Panel22/06/2018 21/09/2018 07/12/2018 22/03/2019 23/05/2018 10/09/2018 12/11/2018 27/03/2019

David Veale p p p p p p p

Patrick Anketell-Jones p p p p p p p p

Rob Appleyard p p p p p p

Lisa O’Brien p p p p

Shaun Stephenson-McGall p p p p

Steve Pearce p p p

Mary Blatchford p p p p p p

Toby Savage p p

William Liew p p p p

Wendy Weston p p p

Shirley Marsh p p p p p p p p

Pauline Gordon p p p p p p

Cheryl Kirby p

Richard Orton p p p p

Table 2: Committee and Panel membership and attendance record (as at 31 March 2019)


Training MembersPLSA LA conference May 2018 Pauline Gordon, Mary Blatchford, William LiewLGC Investments Summit Lisa O’Brien, Pauline Gordon, Mary BlatchfordLAPFF business meeting Richard OrtonLAPFF Annual Conference - December 2018 Steve PearceFundamentals course 2018 Rob Appleyard, Shaun Stephenson-McGall, Pauline GordonLGC Chester March 2019 Rob Appleyard, Mary BlatchfordPooling Engagement Day November 2018 Patrick Anketell-Jones, Lisa O’Brien, William Liew, Toby Savage,

Richard Orton

Table 5: Training provided externally 2018/19

Topic Delivered by:Governance

Legal responsibility of Committee and Officers Governance & assurance framework Administration Strategy Investment Regulations

Committee reports monitoring administration performance of Fund and employers Committee reports for audited accounts and governance Committee reports detailing strategyExternal conferences/training courses Engagement day on pooling of investmentsCommittee reports on pooling of investmentsCommittee reports on Investment Strategy StatementQuarterly Committee reports updating on legislation and consultations

Employer and Funding risks

Admitted bodiesEmployer risksFunding level/solvency

Committee reports provide funding position update

Investment Strategy

Asset AllocationPerformance monitoringInvestment manager monitoringStewardship activitiesResponsible investing policy

Workshop and extra Committee meeting reports reviewing the Investments StrategyQuarterly Committee & Panel reports review investmentstrategy and performanceQuarterly Investment Panel Risk Management report Annual report on Responsible Investing and voting activityStatement of compliance with FRC Stewardship code.External conferences Manager meetings with the Investment PanelPanel workshop on Risk Management Framework

Table 4: Training provided in 2018/19

Local Pension Board Meetings24/05/2018 19/07/2018 08/11/2018 07/03/2019

Howard Pearce p p p p

Gaynor Fisher p p p p

Steve Harman p p

Tony Whitlock p p p

David Yorath p p p p

Tom Renhard p p p

Mark King p p

Table 3: Avon Pension Board membership and attendance record (as at 31 March 2019)


Principle Compliance status CommentGovernance structure Compliant The decision-making structure is clearly defined. It includes the

Committee, Pension Board and the Fund’s representation on the Brunel Pension Partnership Oversight Board.

Representation Partial Compliance There is broad representation of employers and scheme members on the Committee. However admitted bodies are not represented as it is difficult to have meaningful representation from such a diverse group of employers.

Selection / role of lay members

Compliant The role and responsibilities of all members are set out in a Job Description.

Voting Compliant There is a clear policy on voting rights which have been extended to employer and member representatives.

Training / Facility time / Expenses

Compliant There is a clear policy on training. The Fund pays all approved training costs for all members. The training plan reflects the needs of the committee agenda. A training log is maintained.

Meetings Compliant Formal meetings are held quarterly and lay members are included in the formal arrangements.

Access Compliant All members have equal access to meeting papers and advice. Scope Compliant The terms of reference include all aspects of investments,

funding, benefits administration and admissions to the Fund. Publicity Compliant All statutory documents are made available to the public.

Table 7: Governance Compliance

Table 6: Training provided internally 2018/19

Legal Framework Risk Management Interim Valuation Brunel portfolios

David Veale p

Patrick Anketell-Jones p p p

Rob Appleyard p p p

Lisa O’Brien p p p p

Shaun Stephenson-McGall p p p

Steve Pearce p p

Mary Blatchford p p p

Toby Savage p

William Liew p p p p

Wendy Weston p

Shirley Marsh p p p

Pauline Gordon p p p

Cheryl Kirby p

Richard Orton p p p p


Risk Management

The Avon Pension Fund Committee is responsible for ensuring that there is an adequate risk management framework in place to ensure compliance with the regulations and to address the risks faced by the Fund. The Investment Panel strengthens the risk management process with regard to investment issues.

The Fund’s approach to risk management is to manage risk rather than eliminate it entirely. Risk is identified and managed as follows:

1. The Risk Register: The Fund’s Risk Register identifies the governance, operational, funding and investment risks that the Fund is exposed to and, having evaluated the financial and operational impact of the risk on the Fund’s objectives, states the actions taken to mitigate and effectively manage the risk.

The register is reviewed regularly by the management team and is reported quarterly to the Committee. Table 8 shows a summary of the Top 10 material risks from the Risk Register. 2. Internal Control Framework:

Internal controls and processes are in place to manage administration, financial and other operational risks. The Council’s Internal Audit annually assesses the processes in place within the Fund in order to provide independent assurance that adequate controls are in place. The findings of all internal audits are reported to the Committee.

During the year Internal Audit completed two audits of the

Fund’s internal processes as follows:

The Internal Control Report of each 3rd party supplier is reviewed annually to ensure their operational control environment is adequate, the results of which are reported to Committee. Where the Fund invests in a pooled investment fund, the audited accounts of the fund are also reviewed annually.

3. Financial Management Risk: The Fund operates within the Council’s financial framework with segregation of duties to ensure an effective control structure. A key financial risk is the non-payment of contributions by employers. The regulations provide a sanction for late payments. Processes are in place to ensure that contributions are reconciled regularly and late payers are reported to the Committee.

The Fund has a separate bank account from the Council’s to ensure transparency and accountability of the banking arrangements. Management of the Fund’s cash balance is delegated to the Council’s Treasury Management Team who manages the cash separately from the Council’s cash. The Fund has its own Treasury Management Policy.

4. Investment Risk: The investment decision-making process, supported by expert advice, is designed to ensure investment risks are kept to the minimum necessary to achieve the Fund’s long term investment objectives. The Investment Strategy Statement sets out the

investment strategy and how investment risks are considered and managed. The Statement of Accounts includes a disclosure on Financial Risk Management with particular reference to the investment strategy.

Investments by their very nature expose the Fund to varying degrees of risk, including market, interest rate, foreign currency, credit and liquidity risks. Such risks are managed through the diversification of assets, how the assets are invested and by managers. The Investment Strategy is reviewed periodically after the triennial valuation. The next review will be undertaken in 2019.

In between strategic reviews, the Committee and Investment Panel monitor the performance of the investment strategy, providing flexibility to alter the strategy if required. A robust manager selection process assesses the risks of the investment approach and the manager will pose to the Fund.

The provision of expert advice is a key element of the risk management process. The Fund has appointed investment consultants to provide strategic investment advice as well as advising on managers’ performance and manager selection. Other expert or specialist advice, such as tax or legal advice, is commissioned as required.

Much of the investment management process is outsourced to investment managers and the global custodian. This arrangement

Audit Assurance levelCOP14 – Maintaining Contributions & Providing Member Information 4 = GoodData Integrity - Scheme Record Keeping 4 = GoodPensions Payroll 4 = Good


provides a clear segregation of duties within the Fund, with the in-house Investments Team closely monitoring performance and compliance with regulations and mandates. In addition the audited internal control reports for each of the investment managers are reviewed annually.

The Fund is a member of Brunel Pension Partnership to pool its investment assets. An FCA authorised company (“Brunel”) has been established to manage the assets for the LGPS funds within the pool. The strategic decisions such as asset allocation will remain with the Avon Pension Fund Committee; Brunel will them implement the Fund’s strategy. Brunel’s control environment will be monitored by the Fund and other LGPS funds participating in the pool.

5. Funding Risk: The Funding Strategy Statement sets out the funding strategy and policies for the Fund and it is reviewed at least every three years as it forms the basis for the actuarial valuation.

The potential insolvency of scheme employers, leaving outstanding liabilities in the Fund, is a significant risk. The regulations now require all bodies that wish to be admitted to the Fund to be guaranteed by a scheme employer(s) or to provide a bond to protect the Fund in the event of insolvency. The Fund monitors the financial sustainability of the scheme employers and takes this into account when setting contribution rates and funding plans.

A key risk for employers is that the employer contribution rate is incorrectly calculated due to inaccurate membership information held by Fund. The Employer Services Team reconciles the membership data to identify and resolve data queries with employers.

A captive insurance arrangement has been set up within the scheme to reduce the risk of a significant increase in liabilities

for smaller employing bodies that arise when early retirements are awarded under the ill-health regulations.

Some funding risks can be mitigated by the investment strategy. The funding and investment strategies focus on the expected real returns from the assets, thus slightly mitigating the effect of inflation on the value of the pension liabilities. The Fund has implemented a liability management framework which increases the liability “protection” within the investment strategy.

6. Benefits Administration Risk: These risks relate mainly to the inability of the Fund to meet its obligations and pay benefits accurately and on time as agreed with employers or under statute. The main risks are:

• non- or late payment of members’ benefits

• incorrect calculation of benefits

• breach of Data Protection Regulations

• non-compliance with TPR codes

• failure to comply with Freedom of Information Act requests and Disclosure of Information requirements.

All of the above could lead to adverse publicity, loss of reputation and ultimately statutory fines. In addition, the Fund is dependent on a sole supplier of pension administration software. There are processes in place to mitigate administration risks, as identified in the Risk Register.

7. Training: As the body responsible for the Fund, Committee members are required to attain a level of knowledge about pensions, investment and funding strategies sufficient to carry out their duties effectively. Specifically they must be able to challenge and understand the advice provided when making decisions or scrutinising processes. To facilitate this, training is provided to members

based on the Committee’s workplan. The Committee and Officers are advised by an Investment Consultant on all strategic issues prior to decisions being taken.

The legal requirement for the Local Pension Board is that members must be conversant with the rules of the LGPS and any document recording policy about the administration of the fund. This is implied as a working knowledge so that members are aware of which legislation/policies to refer to when carrying out their role. During the year on-going technical training is provided to LPB members by officers or advisors to the Fund on a full range of topics covering the LGPS framework and TPR requirements.

8. Business Continuity: A Business Continuity Plan is in place primarily to deal with “disaster recovery” and includes contingency measures. The plan identifies critical activities whose failure would lead to an unacceptable loss of service and member records. It sets out measures to minimise the risk of disruption to service and specifies what “triggers” the contingency measures coming into effect. The Disaster Recovery process is tested annually.


Risk Management action Risk - The Fund is unable to recruit appropriately skilled staff exacerbated by the creation of Brunel based in Bristol which will manage the fund’s assets.

Implication - This could restrict the Fund’s ability to develop and implement the service plan and administer the Fund.

• Complete performance review process with all staff to identify training and professional qualification needs based on service requirements.

• Succession planning to build resilience, minimise risk of losing skilled/specialist staff & improve ability to implement temporary cover.

• Rebuilding Investment team after losing staff to Brunel and strengthened Governance and Risk Management within the fund.

• Strategic priorities are continually risk reviewed. • The 2019/22 Service Plan provides for extra resource

to support delivery of strategic training plan.Risk - Increased political pressure to reform the scheme & governance, reduce costs and direct investment decisions. If the fund does not have a robust plan for change, risk that government will direct funds.

Implications - committee is unable or does not make decisions in best interest of the fund.

• The Investment Strategy Statement defines the investment principles and the strategy.

• The Fund participates in Brunel to meet the government broad agenda to reduce investment fees and increase efficiency.

• Avon, Brunel and the LGPS Cross Pool Collaboration Group actively engages with government on a wide range of issues related to the government’s agenda.

Risk - some members face re-election simultaneously leading to lack of knowledge and continuity within the Committee.

Implications - Until members are fully trained there may be a delay in decision making.

• There is a training plan in place linked to the 3 year Service Plan, which is periodically reviewed.

• The Committee includes 3 independent members that are not subject to the electoral cycle.

• An induction programme is provided for all new members, tailored for the Committee agenda for the next 12 months.

• Periodically a self-assessment of training needs is undertaken to ensure knowledge gaps are identified and addressed in the training plan. This is now more important in order for the Fund to retain Professional Investor status under MIFID II.

Risk - The Fund fails to achieve investment returns sufficient to meet its liabilities as set out in the valuation. This may be due to strategy failure or investment managers appointed for each investment mandate failing to achieve their benchmark.

Implications - this could negatively impact employer contribution rates.

• A strategic review of the investment strategy is undertaken at least every 3 years.

• The Fund adopts a diverse strategy across assets and managers which limit the impact of any one asset class or manager on the performance of the fund.

• The strategy is monitored quarterly and annually by Committee (between strategic reviews)

• The Fund implements risk management strategies as appropriate to increase probability that funding plan will be achieved

• The managers are monitored against their mandate guidelines quarterly by the Investments Panel.

• Recommendations for action are made to Committee or actioned under delegated powers of the Panel.

• Specialist advice is commissioned• As assets have started to transition to Brunel, the

responsibility for monitoring and selecting investment managers will transfer to Brunel and The Fund will monitor Brunel’s portfolios and capability as the manager.

Risk – The Fund will retain incorrect pension liability after the GMP Reconciliation Exercise when it will no longer be possible to transfer liability.

Implications – additional costs due to paying pensions based on incorrect liability.

• GMP reconciliation project in place. • Additional resource of 1.5 FTE to carry out

reconciliation. • Exceptions reported to HMRC• Rectification of overpayment cases• Progress/action reports provided to Pensions

Committee & LPB.

Table 8: Summary of Risk Register


Risk - Significant increase in employers especially if all schools convert to academy status.

Implications – the Fund will need additional resources to cope with the extra workload and ensure employers comply with responsibilities under the scheme.

• Resources have been increased to support employer services within both actuarial and administration teams.

• Significant focus on developing more efficient automated processes.

Risk - Failure to secure and manage personal data held by the Pension Fund in line with Data Protection Regulations (GDPR).

Implications – fines and reputational damage if systems and processes are not in place and are complied with.

• All staff undertake GDPR online training programme.• Personal data is shared with 3rd parties through

secure portals, compliant with B&NES DP policies.• GDPR privacy notices provided to all members. • Memorandum of understanding agreement in place

with employers• Project in place to ensure GDPR compliance & identify

processes that need to be put in place. Risk – a delay in the transition of local fund assets to the Brunel portfolios

Implications – any delay could seriously impact the Fund’s and pool’s ability to deliver savings according to financial case.

• The Brunel governance structure is in place to effectively manage the new relationship.

• Expert advice is commissioned as required to assist the transition.

• Interim resources in place to support client side of the pool during the transition.

• Brunel’s transition plan in place and monitored by Client Group. Issues are escalated to Brunel Oversight Board.

• Fund specific plan to ensure any decisions / governance required are identified and dealt with accordingly.

• Quarterly Committee agenda includes Brunel update report.

Risk – under the Cost Transparency Code the Fund must disclose all investment management related costs in its annual report from 2018/19. The Cost Transparency Initiative (CTI) final templates were not issued until May 2019.

Implications - the Fund doesn’t have full disclosure for 2018/19 and reputational damage if cited as non-compliant.

• A project plan is in place to collate as much data as possible in line with the Code for 2018/19.

• As the CTI templates were not issued in time for 2018/19. CIPFA has confirmed 2018/19 disclosure is on best endeavours basis as data is still incomplete.

• The Scheme Advisory Board (SAB) is establishing a compliance system to provide cost effective data collection and compliance checking.

Risk – the Fund does not have adequate and robust systems in place if there is a systems failure

Implications - pensions are not administered and paid in accordance with statutory obligations.

• The Fund has policies in place which are periodically reviewed to ensure statutory obligations are met.

• Financial Systems team provides expert technical support to the Pensions service.

• Operational agreements in place with IT & software provider

• Daily system back-up.• Arrangements with IT to undertake replacement

server, expected to complete during 2019/20.


Pensions Administration & Communications

How the service is delivered

The administration of the Fund is provided by Bath & North East Somerset Council. The pension service is split into two broad management areas: Pension Administration and Finance & Investments.

The Pension Administration team focuses on providing:

• pension calculations for members• timely payment of benefits to its members• accurate information about the fund• management and processing of membership data from scheme employers• support and training to employer organisations in the scheme

The Finance and Investments team focuses on:

• the investment, actuarial and financial aspects of the Fund• implementing and monitoring compliance with the Fund’s Investment Strategy• managing the triennial actuarial valuation and liaising with employers on actuarial issues and outsourcing of

services• managing the Fund’s accounts

The administration team also provides members with:

• An annual benefit statement, outlining their current pension benefits, sent by 31 August (for ‘active’ and ’deferred’ members)

• Regular newsletters (often sent with the annual benefit statement to save costs) outlining pension topics and any law/regulation changes (at least once a year, and within three months of any regulation changes)

• A member website and secure online portal - my pension online - so that members can access their pension account online at any time

• Telephone and email enquiries access• Face-to-face ‘pension clinics’ where members can discuss pension enquiries

These are all outlined in detail within the Communications Policy Statement set out in appendix E.

Pensions Administration Strategy

The Administration Strategy sets out how the administering authority and scheme employers will work together to provide an improving quality level of service to Fund members. The strategy ensures the Fund can continue to deliver a high quality pension service at a time when the operating environment is becoming more complex. The employer base has fragmented, especially with the creation of academies and furthermore the increase in the number of third party HR and payroll providers.

The last Strategy was formulated in 2015, but has been revised and updated in March 2019.

The key objectives of this strategy are to ensure that:

• The Fund and Employers are aware of and understand their respective roles and responsibilities under the LGPS Regulations and in the delivery of administrative functions (largely defined in the Service Level Agreement)

• The Fund operates in accordance with LGPS regulations and is aligned with The Pension Regulator in demonstrating compliance and scheme governance.

• Communication processes are in place to enable both the Fund and Employers to proactively and responsively engage with each other and other partners.

• Accurate records are maintained for the purpose of calculating pensions entitlements and Employer liabilities, ensuring all information and data is communicated accurately, timely and in a secure and compliant manner

• The Fund and scheme employers have appropriate skills and that guidance/training is in place to deliver a high quality service and effectively contribute to the changing pensions agenda

• Standards are set and monitored for the delivery of specified activities in accordance with Regulations and


minimum standards as set out in the Service Level Agreement • In accordance with the strategy employers are fined for late payment of contributions as well as inaccurate or

late year end returns and disproportionate work• Administrative services are developed and delivered digitally as outlined in the ICT Strategy, in order to

streamline processes and maximise efficient use of resources.

The Pensions Administration Strategy is available on the website www.avonpensionfund.org.uk

Greater use of technology

The Fund uses technology to improve the accuracy and flow of data across all aspects of the Fund and to improve communications with members and employers. One of the Fund’s key objectives is for all data to be received and sent electronically between the Fund and employers.

Electronic delivery to members The Fund is moving towards digital delivery of communications to members as a significant cost benefit over traditional postal delivery of hard-copy documents (annual benefit statements, newsletters etc). The Fund’s ICT and Digital “Roadmap” Communications strategies both look to deliver more electronic communications, through development of my pension online (member self-service) and online services over the next 3 years. Self-service facilitiesMy pension online is a member self-service facility which allows members access to their personal pension information, perform “what if” calculations, amend their contact details and update their expression of wish details. The Fund will be developing the platform as a vehicle for electronic communication to members. Electronic employer data submission (i-Connect):The Fund is rolling out monthly data submissions by all employers using the i-Connect middleware software. All employers will be required to submit their membership data via i-Connect by the end of 2019.

WebsitesThe Fund has two websites - one for members (www.avonpensionfund.org.uk) and one for employers (www.apfemployers.org.uk). Both are key access points for information and for self-service facilities. The employers’ website will undergo a redesign and will be relaunched in 2020.

Members’ newsletters Newsletters are currently posted to individual members, however the Fund is moving to distribute newsletters electronically where possible. Cost savings to the Fund have already been achieved by combining postal communications. For example the Pensioner newsletter is posted with the annual P60 and one of the active member newsletters is posted with the Annual Benefit Statements. A newsletter is now included with the Annual Benefit Statement for deferred members.Employers are kept up-to-date with Fund and national pensions-related issues through emailed bulletins, usually on a monthly basis.

Pension Communications

The Fund’s communication aims are to:

• provide clear, relevant, accurate, accessible and timely information to all our audiences and stakeholders • listen and respond appropriately to feedback we receive • use plain language and avoid unnecessary jargon


• use communication channels which best fit the audience and the information being passed on • be a more electronic communication-based Fund, utilising new communication technology (web, email, social

media) • support members to enable them to make informed decisions about their pensions by making information

available • be compliant with all legislative requirements with regard to communicating with members, such as the

Pensions Regulator and Pensions Board

The Communications Policy outlines the communications we provide to various audiences (our stakeholders, audiences and interested parties). The Fund’s Communications Policy was updated in 2019 and is included in appendix E.

Chartered Institute of Public Finance & Accountancy (CIPFA) Benchmarking (Benefits Administration)

The Fund participates in the annual CIPFA Pensions Administration Benchmarking Club, which compares administration costs and performance indicators against other LGPS funds and against a group of funds of similar size. The results identify areas for improvement in the Service Plan, to understand the specific service pressures that the Fund faces and to help the Fund operate as efficiently and effectively as possible. It also provides an indication of relative operational costs.

The latest available report for is for 2017/18 and details are highlighted in the tables below.

The Fund’s own performance targets are set out in the SLAs it has in place with employers, in many cases the Fund’ own SLA targets are more challenging than the statutory legal deadlines. Regular SLA review meetings are held with the unitary authorities.

Value for money statement

The fund is committed to achieving and enhancing value for money and to make the administration of the scheme as efficient and cost effective as possible.

The CIPFA benchmarking data from 2017/18 (the latest available) highlights the Fund’s comparative performance in key cost areas, as shown below. All demonstrate the Fund’s positive cost performance when compared with national averages.

Data quality

Since the introduction of the Pension Regulator’s (TPR) Code of Practice 2014 and Record Keeping Regulations the Fund has a data improvement plan in place to improve both the quality of the Fund’s data as a whole and also working with individual employers to improve their data. A data score of 94% was reported in the TPR Scheme Return as at September 2018.

The Fund is currently awaiting further guidance from SAB in respect of scheme specific data items. Once the list of data is confirmed the Fund will undertake a further review and update its data improvement plan accordingly.

Avon Pension Fund National averageNet cost per member £17.69 £21.85Net staff cost per member £8.06 £9.03Members per FTE 4,575 3,957Costs per staff member £7.86 £9.91

Total costs £’000 £ per member National averageAdministration costs £1,829 £15.75 £20.08Oversight & Governance costs £1,436 £12.36 £8.67Investment management costs £23,109 £198.84 £216.55Total costs £26,374 £226.95 £245.30

Table 9: Costs and financial indicators (2017/18)


2019 2018 2017 2016 2015 2014Active Members 36,894 36,479 36,213 37,899 34,765 34,846Deferred Members 42,114 43,012 41,279 40,711 35,714 35,321Pensioners 32,137 30,734 29,464 28,079 26,006 25,985Total Membership 111,145 110,225 106,956 106,689 96,485 96,152

Table 11: Number of members in fund (2014-2019)

Key performance data

The Fund performance measurements overall during reporting year 2017/2018 were generally below expected targets. A number of factors contributed to this, including the continued increase in the Funds employer portfolio, the implementation of the new administration structure and a high volume of staff turnover during the year. Furthermore, a number of key projects required admin resource to complete.

The Local Pension Board recommended additional further administration resource and this was agreed by the Pensions Committee in March 2018. As such, key performance indicators are expected to show improvement against target in 2018/2019 and will be reflected in the next CIPFA report when published.

In 2019 CIPFA introduced new targets and the Avon Pension Fund will report on these revised targets for next year’s report. Staffing

The pension service is split into two broad management areas: Finance / Investments and Administration. Here are the staffing levels as at 31 March 2019.

Performance IndicatorLGPC

StandardTarget

Fundachievedagainsttarget %

CIPFAClub

average %

Letter detailing transfer in quote 10 days 48.6% 84.5%Letter detailing transfer out quote 10 days 25.5% 84.7%Process and pay refund 5 days 67.1% 87.9%Letter notifying estimates of retirement benefits 10 days 59.0% 90.3%Letter notifying actual retirement benefits 5 days 69.8% 92.0%Initial Letter acknowledging death of member 5 days 95.5% 93.8%Letter notifying amount of dependant’s benefits 5 days 55.5% 91.0%Calculate and notify deferred benefits 10 days 27.6% 78.6%

Table 10: Performance Indicators 2017/18 (latest data available from CIPFA report)

APF Senior Managers 2.4Finance / Investments: FTEs• Finance and Accounting 4• Investment Management 2• Actuarial and Valuation 4• Governance and Risk 1Administration:Employer Services (Employer Relations and Data Control) 15Member Services (Benefits Administration and Pensions Payroll) 19Technical and Compliance (Quality Assurance) 3Communications (web, online, newsletters, publications) 2

Table 10: staffing levels as at 31 March 2019


APF Senior Managers 2.4Finance / Investments: FTEs• Finance and Accounting 4• Investment Management 2• Actuarial and Valuation 4• Governance and Risk 1Administration:Employer Services (Employer Relations and Data Control) 15Member Services (Benefits Administration and Pensions Payroll) 19Technical and Compliance (Quality Assurance) 3Communications (web, online, newsletters, publications) 2

Following the introduction of IConnect records are automatically updated to undecided status to indicate the member has left the post. Our process is to leave records at undecided status until we have further information from the employer or member, at which time they are processed to the correct status. We also have frozen refund records which are either historical for pre 2014 members that we are unable to trace or post 2014 members who have up to five years to claim a refund of contributions or transfer out of the scheme.

Budget Outturn

During the year to 31 March 2019, total administration costs (excluding advisory and investment management costs) were £2.7 million, 7% below budget.

Annual investment management fees paid in the year were below budget at £20.5 million. There were fee savings arising from the transition of assets to Brunel portfolios and changes in the investment structure.

Governance costs were 12% higher than budgeted at £0.8 million. The main reason was higher than anticipated costs for the interim valuation, which included additional support from the Actuary to improve the quality of member data in preparation for the 2019 valuation. In addition, the increase in employing bodies has resulted in increased levels of employer specific actuarial work.

Internal Resolution Dispute Procedure (IDRP)

If there is a complaint or dispute against a decision or action by either the Avon Pension Fund or an individual fund employer, concerning a matter relating to the LGPS, there is a provision within the LGPS regulations for an appeal under the IDRP.

The disputes process follows a set procedure, with the first stage allowing the complainant to ask the body who originally made the decision to review it, namely the individual employer or the Administering Authority. This must be done within six months of the date of the notification of the decision or the act or omission of the complaint (or such longer period as the adjudicator considers reasonable).

Where the complainant remains dissatisfied with the outcome of stage 1, they may refer the complaint to the Administering Authority for reconsideration under stage 2 of the appeals process. The Administering Authority has a stage 2 adjudicator who will re-examine the case.

Should the complainant remain dissatisfied after the stage 2 outcome, they may refer the complaint or dispute to the Pensions Ombudsman for determination.

The Internal Disputes Resolution Procedure guidance and forms are available from the Fund and on the website: https://www.avonpensionfund.org.uk/help-with-pension-problems

Active Ceased TotalScheduled body 279 0 279Admitted body 139 2 141Total 418 2 420

Ceased employers have outstanding liabilities but no active members

Table 13: Number of active employers in the fund (2018/19)

Ill health retirements 56Early retirements 1393Normal retirements 478

Table 12: New pensioners (2018/19)


Who get outside advice and help from?

There are also a number of other regulatory bodies that may be able to assist

The Pensions Advisory Service (TPAS)

TPAS can assist members and beneficiaries of the scheme in connection with any pension query they may have or any difficulty which they cannot resolve with the scheme administrator. TPAS are now part of the Money and Pensions Service which was set up by the government to bring together three respected bodies of financial guidance, the Money Advice Service, The Pensions Advisory Service and Pension Wise, into one single organisation.

Info and contact details - www.pensionsadvisoryservice.org.ukMoney and Pensions Service, 120 Holborn, London, EC1N 2TDTelephone: 0800 011 3797

Pensions Ombudsman

In cases where a complaint or dispute has not been satisfactorily resolved through the Internal Disputes Resolution Procedure or with the help of TPAS, an application can be made to the Pensions Ombudsman within three years of the event that gave rise to the complaint or dispute. The Ombudsman can investigate and determine any complaint or dispute involving maladministration of the scheme or matters of fact or law and his or her decision is final and binding (unless the case is taken to the appropriate Court on a point of law). Matters where legal proceedings have already started cannot be investigated by the Pensions Ombudsman.

Info and contact details - www.pensions-ombudsman.org.ukThe Pensions Ombudsman Service, 10 South Colonnade, Canary Wharf, E14 4PU Telephone: 0800 917 4487

IDRP cases 2018/19

During the year to 31 March 2019 the fund received one application under the stage 1 process which was not upheld and one application under the stage 2 process which is currently pending a decision following a recommendation to the employer to reconsider their decision under stage 1. Please note that as many stage 1 appeals are dealt with by the member’s employer we may not have been informed of all appeals.

LGPS policies and guidance for employers and members

The Avon Pension Fund website provides comprehensive details of how the Local Government Pension Scheme works and its policies. These can be found at: https://www.avonpensionfund.org.uk/local-government-pension-scheme

The APF Employers website gives LGPS policy details and guidance specifically for employers. These can be accessed at: www.apfemployers.org.uk


Pooling Of Assets – Analysis Of Costs & Savings

Investment Strategy Statement

In 2015 LGPS: Investment Reform Criteria and Guidance was issued which set out how the government expected LGPS funds to establish their asset pooling arrangements. The objective was to deliver:

• Benefits of scale.• Strong governance and decision making.• Reduced costs and excellent value for money, and• An improved capacity and capability to invest in infrastructure.

This has led to the creation of eight asset pools which have significantly changed the previous approach to managing the Fund’s assets. Pools are responsible for implementing each local fund strategy; however, responsibility for determining asset allocation and the investment strategy remains with Avon Pension Fund Committee.

The Avon Pension Fund is one of ten LGPS funds participating in the Brunel Pension Partnership. The other funds (“clients”) are Buckinghamshire, Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset and Wiltshire.

The governance arrangements for the pool have been established. The Brunel Oversight Board is comprised of representatives from each of the administering authorities and two member observers with agreed constitution and Terms of Reference. Acting for the administering authorities, it has ultimate responsibility for ensuring that Brunel delivers the services required to achieve investment pooling and deliver each Fund’s investment strategy. Brunel Oversight Board is supported by the Client Group, comprised of investment officers drawn from each of the administering authorities. The Client Group is responsible for monitoring Brunel, including the plan for transitioning assets to the portfolios, and provides a forum for discussing technical and practical matters. It is responsible for providing practical support to enable the Brunel Oversight Board to fulfil its monitoring and oversight function.

Along with the other administering authorities, Bath and North East Somerset Council approved the business case for the Brunel asset pool in February 2017, based on estimated potential fee savings of £550 million over a 20 year period (to 2036) across the ten funds, of which Avon Pension Fund’s share was £73 million. Initial costs of the project meant the Fund’s breakeven was in 2024.

The expected costs and savings for the Fund from the original business case, and submitted to Government as part of pooling, are set out in the following table.

Table 14: Avon Pension Fund Expected Costs and savings from Pooling:

(as per Business Case Submissions)

2016-2017

2017-2018

2018-2019

2019-2020

2020-2021

2021-2022

2022-2023

2023-2024

2024-2025

2025 to 2036

Total

BlackRock Equities £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Set up Costs 1,265Ongoing Brunel Costs 674 893 923 953 985 1,017 1,051 14,127 20,623Avon Fund Savings (259) (267) (275) (283) (291) (300) (309) (4,077) (6,061)Transition Costs 2,957 4,067 260 - - - - - 7,284Fee Savings (125) (1,216) (2,687) (2,927) (3,185) (3,892) (4,164) (78,583) (96,778)Net costs / (savings) 117 1,148 3,248 3,478 (1,779) (2,257) (2,491) (3,175) (3,422) (68,533) (73,667)

Following approval of the business case, Brunel Pension Partnership Ltd was established in July 2017, wholly owned by the ten Administering Authorities (in equal shares) that participate in the pool. The company is authorised by the Financial Conduct Authority (FCA). It is responsible for implementing the strategic asset allocation of the participating funds by investing Funds’ assets within defined outcome focused investment portfolios. In particular, it researches and selects the external managers or pooled funds needed to meet the investment objective of each portfolio. Once the portfolios are established, Brunel is responsible for allocation between mandates within each


portfolio and monitoring the performance of the underlying managers.

Now that the pool is operational, its financial performance will be monitored to ensure that Brunel is delivering on the key objectives of pooling. This includes reporting of the costs associated with the appointment and management of the pool company including set up costs, investment management expenses and the oversight and monitoring of Brunel by the client funds. The set up costs incurred by Avon Pension Fund are set out in the following table.

Table 15: Set up costs

Direct£000s

Indirect£000s

Total£000s

Cumulative£000s

Recruitment 18Legal 133 Consulting, Advisory & Procurement 82 Share Purchase 840 Total Set Up Costs 1,072

The set up costs have come in within the budget which was an achievement given the complexity of creating a new company and investment platform.

During the year, £736m of the Fund’s assets transitioned to Brunel portfolios and the table below shows the assets currently managed within the pool.

Table 16: Investment assets by manager from Statement of Accounts

31 March 2019Investments managed by Brunel Pension Partnership: £’000 %LGIM Low Carbon Global Equities 520,926 10.8 Brunel Infrastructure Portfolio 11,152 0.2 Brunel Secured Income Portfolio 16,695 0.3 Brunel UK Equity Portfolio 187,270 3.9

736,043 15.3 Investments managed outside Brunel Pension Partnership 4,083,710 84.7TOTAL INVESTMENT ASSETS 4,819,753 100.0

In 2018/19 transition costs arose from the transition of the Fund’s UK Equity and the Low Carbon Passive Equity assets. The transition of the Low Carbon Equity assets was in July 2018 and the UK Equity assets followed in November 2018. The transition costs were below the estimate in the business case for 2018/19 as fewer transitions than anticipated were completed in the year; the original business case assumed c. 50% of the Fund’s active equity assets would transition in 2018/19. With an increase in assets transitioning in 2019/20, it is anticipated that transition costs will increase in 2019/20.

Table 17: Transition Costs

Direct£000s

Indirect£000s

Total£000s

Cumulative£000s

Transition FeeTax 300 300 300 Other Transition Costs 672 672 672 Total Transition Costs 972 972 972

The analysis below shows the fee savings achieved for the assets that have transitioned to Brunel portfolios against the fees charged to the Fund at the time the business case for pooling was prepared in 2016. It therefore ignores fee reductions that have been negotiated with incumbent managers between the formulation of the business case and the transition to Brunel.


Table 18: Investment Fee savings from Pooling

Value in Original

Business Case 31

March 2016

Value at 31 March 2019

Price Variance

Quantity Variance

Total Saving / (Cost)

£000s £000s £000s £000s £000sPassive UK Equities 167,800 - - 49 49Passive Global Equities 348,900 - - 101 101Passive Low Carbon Equities - 520,925 55 (129) (74)Active UK Equities 201,993 187,270 190 39 229Infrastructure - 11,152 (13) (18) (31)Secured Income - 16,695 (7) (12) (19)

226 30 256

The price variance shows the savings / (costs) on the fee rate achieved through pooling. The quantity variance reflects the savings / (costs) due to changes in allocations compared to the business case. Therefore, when comparing the fee savings against the business case the price variance reflects the actual saving in fees. At the time of the business case in 2016, the Fund was invested in Passive UK and Global Equities; these assets switched into Passive Low Carbon Equities in 2017, prior to pooling. The fees for the Passive Low Carbon equities are higher than those for Passive UK and Global equities, giving rise to a ‘cost’ from pooling. The fee rates achieved on all the passive portfolios established by Brunel are lower than the fees charged in the business case.

The fee saving for the UK Equity portfolio is due to the lower overall fee rate achieved by Brunel. The fee paid by the Fund prior to pooling consisted of a combined annual management fee and performance fee. The fee rate negotiated by Brunel has no performance element. There is also a saving from transitioning fewer assets than in the business case due to a reduction in the allocation to UK Equities since 2016. In addition to these transitions, the Fund has made new allocations to Brunel’s Renewable Energy Infrastructure and Secured Income portfolios. The Infrastructure portfolio invests in private market pooled vehicles which have a higher cost than the Fund’s other infrastructure portfolio. The new allocation to Secured Income is funded from lower cost assets, thus showing an overall increase in costs.

The ongoing fee paid to Brunel in 2018/19 for its core services was £1.05m. This includes custody, performance measurement and reporting costs for Brunel as well as client’s side support costs. The estimated cost in the original business case of £0.67m excluded custody and performance measurement costs of £0.15m. The increase in the costs for 2018/19 is due to inflation and additional resources approved by Shareholders required by Brunel over and above those envisaged in the original business case, in order to deliver the service required by the clients. As a result, the ongoing overhead cost of the company is higher than originally estimated.

A summary of the costs and savings to date compared to the original business case is provided in the following table.


Table 19: Expected versus Actual Costs and Savings to Date

2017/18 2018/19Budget Actual Budget Actual

In Year Cumulative to date




£000s £000s £000s £000s £000s £000s £000s £000sSet up costs

1,148 1,265 1,072 1,072 - 1,265 - 1,072

Ongoing Brunel Costs

- - - - 674 674 1,053 1,053

Avon Internal Savings

- - - - (259) (259) (215) (215)

Transition costs

- - - - 2,957 2,957 972 972

Fee savings - - - - (125) (125) (226) (226)Net costs / (savings)

1,148 1,265 1,072 1,072 3,248 4,513 1,584 2,656

The most significant variances from the original business case are summarised as follows:

• Transition costs are lower as fewer transitions completed in 2018/19 than assumed in the Business Case; • Fee savings are greater than anticipated mainly due to the lower fees of the UK Equity portfolio• Ongoing costs of Brunel are higher than anticipated

The Fund’s internal savings are marginally lower than those envisaged in the original business case. These savings includes the cost of custody and performance measurement (based on 2016/17 costs and now included in on-going Brunel costs), a slight reduction in staff costs and limited savings for investment advice.


Investments

The Avon Pension Fund is a funded scheme which means that the contributions and fund monies not currently needed to meet pension and benefit payments are invested and the Fund receives income from these investments. The Fund’s investment objective is to meet the future pension payments of both past and current members.

1. Investment Strategy Statement

The LGPS (Management and Investment Funds) Regulations 2016 require the Fund to produce an Investment Strategy Statement (ISS) which sets out the principles that guide the decision making for investing the Fund’s assets. It also sets out the framework for investing the Fund’s assets to ensure consistency with the Funding Strategy Statement. A wide range of investments are permitted to ensure the Fund achieves an optimal risk/return profile and that assets are sufficiently diversified. The LGPS regulations no longer list restrictions in particular types of investments but instead seek to transfer decisions and their considerations more fully to the Fund within a new prudential framework.

The ISS sets out the Fund’s core beliefs that underpin the investment strategy, the process for ensuring the suitability of investments and the key risks the Fund is exposed to, and how these risks are managed. Key elements include:

• Investment objective • Management of the main

sources of risk• Responsible Investing:

environmental, social and environmental (ESG) considerations

• Exercise of voting rights • The Fund’s approach to pooling

it assets with other funds (Brunel Pension Partnership)

The regulations state that the ISS must be kept under review and

revised from time to time particularly when there is a material change in risk, and reviewed at least every three years. The current version of the ISS was updated and approved by the Committee in December 2018. The current version coupled with the statutory guidance for preparing an Investment Strategy Statement is set out in Appendix F.

2. Investment Stewardship

The Fund is a signatory to the FRC UK Stewardship Code and has outlined its approach to stewardship, including voting and engagement, in its Statement of Commitment to the Code. The Fund is Tier 1 compliant, defined as those signatories providing a good quality and transparent description of their approach to stewardship and explanations of an alternative approach where necessary.

The Fund’s latest statement of compliance can be found on the website www.avonpensionfund.org.uk (search FRC Stewardship Code).

The Fund is a member of the Local Authority Pension Fund Forum (LAPFF), a collaborative body that exists to serve the investment interests of local authority pension funds. In particular, LAPFF seeks to maximise the influence the funds have as shareholders through co-ordinating shareholder activism amongst the pension funds. Both committee members and officers regularly attend the quarterly LAPFF meetings.

3. Brunel Pension Partnership (Brunel)

By the end of the year, Brunel had almost a third of its clients £29 billion of assets under its management. In line with this, significant advances have been made from an operational perspective.

Notably, Brunel launched an Authorised Contractual Scheme, a tax efficient pooled fund vehicle

through which it will offer most of its listed market portfolios. In addition it selected private market funds investing in secured income, private equity and infrastructure assets.

In the field of Responsible Investment, Brunel has been active in collaborating with a number of strategic partners. Hermes, Brunel’s voting and engagement provider, have assisted in developing Brunel’s Stewardship Policy, which provides client funds with in-depth analysis on how their respective portfolios perform against a number of Environmental, Social and Governance criteria.

The process of transitioning the Fund’s assets to the portfolios managed by Brunel is expected to be fully completed during 2022. Until such time as transitions take place, the Fund continues to maintain the relationship with its current investment managers and oversee their investment performance, working in partnership with Brunel where appropriate.

Progress on delivering the savings from pooling is covered in detail in Section 07: Pooling of Assets.

4. Investment Strategy

The pensions paid out to members over time are funded through the contributions from employees and employers and the investment assets. Therefore the objective of the investment strategy is to achieve the investment return required to fund the pension liabilities over time and to recover any funding deficit as set out in the funding strategy. Specifically the investment strategy is designed to produce investment returns that will help stabilise and minimise employer contribution rates in the long term as well as reflecting the balance between maximising returns, protecting asset values, and matching the liabilities (to minimise investment risk). The strategy reflects the Fund’s


appetite for risk and its willingness to accept short term volatility within a long term strategy. The Fund pursues a policy of managing risk through diversification by asset class and by investment managers. The Committee periodically reviews its investment strategy in order to ensure the strategy reflects the Fund’s liability profile.

Asset Allocation

Table 20 shows the Fund’s actual asset allocation at 31 March 2019 against the strategic allocation benchmark. The table also shows the returns from each asset class over one and three years to 31 March 2019.

The Fund’s assets are managed by external investment managers. The investment management structure and amount of assets managed by each manager as at 31 March 2019 is set out in Chart 1.

Activity during 2018/19

(a) Risk Management Framework:

Following the successful implementation of the liability risk management and equity protection strategies last year the Fund focussed on refining the way these strategies are implemented. This involved a review of the trigger-based framework attached to the liability risk management strategy as well as a review of the equity protection strategy, collateral requirements placed on the Fund and the appropriateness of the financial instruments used to implement these strategies in the context of a changing regulatory environment.

The Fund’s Equity Protection Strategy (EPS) is structured to protect the Fund from a sharp draw down in equity valuations over the 2019 triennial valuation period. During the year the strategy performed broadly in line with expectations; adding value when underlying equity markets declined and detracting value as underlying equity markets increased toward the upside ‘cap’. The review of this strategy centred on its collateral requirements, that is, the amount of capital that is required to maintain

the target level of hedging. To ensure efficient management of collateral, the investment manager has access to passive equity assets which can be sold and the equity exposure would be synthetically replaced using derivatives.

(b) Corporate Bond Based Liabilities:

A subset of the Fund’s liabilities are valued using corporate bond yields. Historically the Fund ‘matched’ these liabilities by investing assets in a passive corporate bond fund. Over the year this liability subset grew to a point where the assets could be managed on a bespoke basis, allowing the Fund to more accurately match the cash flows arising from these liabilities. Work began to implement this strategy at the end of the financial year.

(c) Liquidity Management:

The Fund implemented a cash management strategy that utilises exchange-traded funds (ETFs) to create an exposure that offers a similar return profile to the Fund’s strategic benchmark, which reduces the drag on investment returns from cash given that interest rates remain exceptionally low. By investing any surplus cash in highly liquid ETFs the Fund retains its ability to draw cash at short notice for its private market investments and simultaneously limit the impact of holding cash at low interest rates.

(d) Transition of Assets to Brunel:

During the year the Fund’s passive low carbon equity and active UK equity mandates were transitioned to Brunel portfolios, totalling £736 million at 31 March 2019.

An outcome of the last strategic investment review was to allocate 2.5% of Fund assets to Renewable Energy and 7.5% to Secured Income, with both allocations to be managed within Brunel’s private market portfolios. Of the capital committed to Renewables, EUR13m was drawn down in December 2018 and deployed across two pan-European funds. One fund invests solely in renewable energy; the other includes sustainable and social infrastructure such as

mass transport (metros) which are typically electric, and social infrastructure such as hospitals and government accommodation as well as renewable energy projects. During January 2019, £16.5m was drawn down in the Secured Income portfolio, which invests in inflation-linked cash flows (backed by quality real estate assets).

5. Responsible Investing Policy

As a long term investor the Fund seeks to deliver financially sustainable returns to meet the pension benefits of the scheme members. The Fund has a fiduciary duty in managing the fund assets which includes managing the Environmental, Social and Governance (ESG) risks that may be financially material to the Fund. The Responsible Investing (RI) policy seeks to integrate ESG issues into its strategy in the belief this can positively impact financial performance. The foundations of the Fund’s approach to RI are its RI Principles, which are set out below: • The Fund is a long-term investor,

with liabilities stretching out for decades to come, and seeks to deliver long-term sustainable returns.

• The identification and management of ESG risks that may be financially material is consistent with our fiduciary duty to members.

• The Fund integrates ESG issues at all stages of the Fund’s investment decision-making process, from setting investment strategy to monitoring the Fund’s investment managers.

• The Fund recognises that climate change is one of the ESG factors that poses a long-term financial risk.

• The Fund seeks to identify innovative and sustainable investment opportunities, in-line with its investment objectives.

• The Fund applies evidence-based decision-making in the implementation of its approach to RI.

• The Fund has a duty to exercise its stewardship and active ownership responsibilities (voting and engagement)


Asset Class31 March

2019 Allocation

Strategic Allocation Range

Asset Class Returns

1 year 3 year

Developed Market Equities 35.9% 32.0% 27.0-37.0% 11.1% 15.4%Emerging Market Equities 4.7% 5.5% 0.0-10.0% 0.1% 14.8%Diversified Growth Funds 12.4% 15.0% 10.0-20.0% 6.5% 7.0%Generalist Infrastructure 6.9% 5.0% 5.0-10.0% 6.0% 4.2%Renewable Infrastructure 0.2% 2.5% 0.0-5.0% - -

Liability Matching Assets 12.0% 12.0%

No set range (depends

on collateral position)

- -

UK Corporate Bonds 1.8% 2.0% 0.0-5.0% 4.9% 7.4%Fund of Hedge Funds 4.8% 5.0% 0.0-7.5% 3.5% 3.5%Multi Asset Credit 8.5% 6.0% 3.0-9.0% 4.8% 4.7%Property 9.2% 7.5% 5.0-10.0% 7.4% 8.0%Secured Income 0.3% 7.5% 0.0-10.0% - -Cash* 3.1% 0.0% 0.0-5.0% - -

*cash and other instruments including currency instruments and ETF liquidity strategy

Table 20: Strategic Asset Allocation and Actual Asset Allocation

Chart 1: Asset allocation by Manager 31 March 2019

BlackRock QIF

Schroder (Global)

Genesis (Emerging Markets)

Brunel (UK Active Equities)

Jupiter (Sustainable Equities)

Unigestion (Emerging Markets)

Pyrford (DGF)

Ruffer (DGF)

JP Morgan (FoHF)

Schroder (UK)

Partners (Global)

Brunel (Secure Income)

IFM (Infrastructure)

Bruel (Renewable Infrastructure)

Loomis (MAC)

Cash

Brunel (Passive Low Carbon)

BlackRock (Multi-asset)

Multi AssetPassive

Risk Management

Strategies

Active Equities

Diversified Growth Funds

Fund of Hedge Fund

Property Secure Income

Renewable Infrastructure

1000000

800000

600000

400000

0

200000

Generalist Infrastructure

Multi Asset Credit

Cash & Currency Hedging

1200000


effectively by using its influence as a long-term investor to encourage responsible investment behaviour.

• The Fund recognises the importance of collaboration with other investors in order to achieve wider and more effective outcomes.

• The Fund aims to be transparent and accountable by disclosing its RI policy and activity.

The RI Policy sets out the Fund’s approach to RI and how the policy is implemented within the investment portfolio. The policy document is available from the website www.avonpensionfund.org.uk (search Responsible Investment Policy).

RI Activity during 2018/19

The Fund sought to manage Responsible Investment and Environmental, Social and Corporate Governance (ESG) risks during the year as follows:

• Investing in renewable infrastructure funds through Brunel

• For the second year the Fund undertook a review of the carbon exposure of the Fund’s equity portfolio. The analysis concluded that the aggregate Fund exposure within equities was more carbon efficient than its benchmark, outperforming the benchmark by 28.5% (i.e. having a lower exposure) versus last year’s number of 20.5%. This change was driven mainly by the passively managed Low Carbon Global equity portfolio. Notably, sector allocation and stock selection taken together, translated into a positive overall effect, based on the fact that active investment managers invested in less carbon intensive sectors and picked less carbon intensive stocks than the broader market.

• Holding managers to account and querying Responsible Investment / Environmental, Social and Governance factors in their investment process where appropriate. This year specific topics managers were challenged on included climate change, pay equality and cyber and data protection.

• Continued participation in the Local Authority Pension Fund Forum (LAPFF) recognising that their collaboration and engagement activities are important tools to manage Responsible Investment risks. Officers and Committee members attended three business meetings during the year.

• Policy development in collaboration with Brunel including dedicated Stewardship and Voting policies designed to provide Brunel’s appointed investment managers with clear voting guidelines on major themes such as sustainability, human capital and corporate conduct and governance.

• Working with Brunel and key stakeholders to enhance ESG reporting, to help quantify the impact of engagement. Over the year key themes and successes have included engagement with 21 companies held within Brunel portfolios, covering a range of 50 ESG issues. Environmental topics featured in 32% of engagements, 63% of which related directly to climate change. Social topics featured in 18% of engagements, where diversity and human rights featured prominently. Of the 40% of Governance related engagements the majority of discussions revolved around executive remuneration.

6. Investment Performance

2018/19 performance

For the year ending 31 March 2019 total Fund assets (including currency hedging) increased by £211m to give a value of £4,819m. The investment return of 5.2% was primarily due to the strong positive performance from global equities, infrastructure and liability matching assets.

The first half of 2018 saw strong global equity market performance driven by broad economic expansion. Later in the year global trade tensions coupled with expectations of increased US interest rates led to a sharp sell-off in equity markets followed by a marked recovery in the first quarter of 2019 as trade tensions subsided

and a ‘softening’ in the Federal Reserve’s position on future US interest rate increases bolstered investor confidence. The developed markets index (FTSE World) returned 11.1% over the year, while the emerging market index (FTSE All World Emerging Markets) returned 1.9% over the same period.

There was also significant volatility in bond markets over the year driven by changing expectations for rises in interest rates in the US. UK Government Bonds as measured by the FTSE Gilts All Stocks Index returned 3.7%. Investor appetite for growth assets remained strong into the final quarter of the year as credit spreads narrowed, indicating strong demand for corporate debt.

Alternative asset classes displayed mixed returns over the period. Strong underlying fundamentals and an abundance of capital targeting the global property sector meant real estate markets avoided any broad-based weakness. However, at the sector level property returns varied; retail and leisure sectors came under pressure due to a series of high profile corporate failures. In contrast, investment in the industrial sector accelerated as companies sought to facilitate higher e-commerce activity. The Fund was well positioned with minimal exposure to the UK retail sector and matched index returns of 4.8% over the year.

Despite significant levels of institutional investor capital targeting infrastructure projects driving yields lower, the Fund’s infrastructure portfolio performed well, delivering an absolute return of 8.5% in local currency terms. An increasingly specialised renewable infrastructure space provided opportunities for the Fund to invest via Brunel.

It was a subdued year for hedge funds. An Increase in merger and acquisition activity produced the highest returns in the Fund’s hedge fund portfolio. In local currency terms the Fund’s hedge fund strategy delivered an absolute return of 3.0%, underperforming its cash benchmark but significantly outperforming the comparable HFRX Global Hedge Fund Index.


Chart 2: Long Term Performance

Avon Pension Fund Inc Currency

Avon Pension Fund Ex Currency

Fund Benchmark

Table 21: Attribution to performance from asset allocation and stock selection

Asset Allocation Impact (p.a) Stock Selection Impact (p.a)Asset Class 1 Year 1 YearUK equities 0.0% -0.3%Developed Overseas Equities -0.5%* -0.2%Emerging Market Equities 0.1% 0.2%Diversified Growth 0.0% -0.9%Fund of Hedge Funds 0.0% 0.3%Property 0.0% -0.2%Infrastructure 0.0% 0.7%Multi-Asset Credit 0.0% -0.4%UK Corporate Bonds 0.0% 0.0%Liability Matching Assets 0.0% 0.0%Total -0.4% -0.8%

Source: State Street Bank and Trust, Mercer. Note: Columns may not sum due to rounding.* Includes -0.6% impact of equity protection strategy

Table 23: Top 10 Largest Investment Holdings at 31 March 2019

Top 10 Largest Investment Holdings £’000s % of FundBlackRock Liability Solutions Fund 1,008,422 20.9%LGIM MSCI Low Carbon Tracker Fund (Brunel) 520,926 10.8%Natixis Investment Solutions 410,444 8.5%CF Ruffer Absolute Return Fund 379,136 7.9%IFM Global Infrastructure Fund 331,571 6.9%JP Morgan Absolute Return Strategies Fund 232,127 4.8%Pyrford Global Total Return Fund 218,582 4.5%Brunel UK Equity Fund 187,270 3.9%Genesis Emerging Markets Equity Fund 117,600 2.4%Partners Group Global Real Estate Fund 114,749 2.4%


Absolute returns over the year to March were broadly positive across the Fund’s investment managers with all of the managers (aside from one Diversified Growth Manager) delivering positive returns over the period. On a relative basis performance was mixed. The Fund’s active managers with a defensive bias struggled to fully capture the market preference for growth stocks, especially some highly valued technology companies. Although the Diversified Growth Funds underperformed their targets, they shielded the Fund from equity market volatility during the market correction in late 2018. Elsewhere, the UK Equity Socially Responsible

Investment portfolio underperformed its benchmark primarily due to its zero weighting in the oil & gas sector; by excluding this sector, the manager failed to capture c.2% of the c.6% return of the FTSE All Share index. The Fund’s multi-asset credit mandate underperformed in part due to its holdings in emerging market debt.

Finally Sterling depreciated by 7.1% against the US Dollar, 3.3% against the Yen and appreciated against the Euro by 1.7% during the year. This resulted in a negative return from the currency hedge.

Overall, the Fund’s return of 5.2% (including the impact of the currency hedge) underperformed its strategic benchmark return of 7.7% by 2.5%. Excluding the currency hedge the Fund’s return of 6.5% was 1.2% behind the strategic benchmark. The equity protection strategy detracted 0.6% given the rally in equities in the final quarter. Asset allocation added 0.2% and the impact of the active managers was -0.8%, driven primarily by underperformance of the Fund’s diversified growth and credit managers. The annualised contribution to performance by asset class and stock selection over a one-year period can be seen in Table 13.

Table 22: Contribution to performance – relative returns of investment managers

Manager Mandate 1 Year Relative Return

3 Years Relative Return

5 Years Relative Return

Brunel Passive Low Carbon Equities -- -- --Brunel Active UK Equities -- -- --Brunel Secured Income -- -- --Brunel Renewable Infrastructure -- -- --BlackRock Passive Developed Market Equities 0.0% -- --BlackRock Passive Corporate Bonds 0.0% 0.1% --BlackRock 5 Equity Protection Strategy -6.3% -- --BlackRock Liability Risk Management Strategy 0.0% -- --Genesis Emerging Market Equities 2.9% -0.3% -0.2%ASI Global Absolute Return Strategy 3

Diversified Growth Fund -10.5% -7.2% --

JPMorgan 2 Fund of Hedge Funds -2.3% -0.7% --Jupiter UK SRI Equities -2.5% -3.8% -1.5%Jupiter Global Sustainable Equities -- -- --Partners 1 Global Property -3.0% -- --Pyrford Diversified Growth Fund -3.5% -4.3% -3.3%TT International 4 UK Equities -2.3% -1.5% 0.9%Schroder Global Equities -0.9% 0.0% 0.2%Schroder UK Property -0.1% -0.2% 0.0%Ruffer Diversified Growth Fund -6.4% -- --Loomis Sayles Multi Asset Credit Fund -3.7% -- --IFM 2 Infrastructure 3.3% 10.0% --Unigestion Emerging market Equities 2.9% -3.4% -1.2%

¹ Performance is shown since inception of the mandate on a Net Internal Rate of Return basis

² Returns expressed in USD

3 Mandate terminated; performance shown to termination date

4 Assets transitioned to Brunel; performance shown to termination date

⁵ Performance is shown since inception and relative to a proxy equity index representing all four hedged regions


The investment return impacts the funding or solvency level of the Fund. The strategic benchmark represents a portfolio that, using the long term return expectations, should generate a real return of around 2.75% (that is, it is the best estimate return generated from the investment strategy). Achieving a real return is important as the pension benefits are linked to inflation. During the year the funding level remained stable as the return on the assets was in line with the increase in the present value of the liabilities.

Longer term performance

The longer term performance of the Fund is shown in Chart 2 (the returns are annualised) compared against the Fund’s benchmark. The Fund return is inclusive of currency hedging whereas the benchmark return excludes currency hedging.

Over three years the Fund’s return of 9.7% per annum (excluding currency) is below the strategic benchmark return. Over the same period, returns from developed and emerging market equites were above their assumed strategic returns used in the 2017 investment strategy review. Property returns remain above the assumed return of 5.75% but hedge fund returns remain below long-term averages,

having been affected by low cash rates. Over a three year period the currency hedging program has detracted 0.8% from the overall return. Over longer periods, the strategy has delivered real returns in excess of the real return required in the funding strategy; as a result the funding level has improved.

Table 22 shows how each of the investment managers have contributed to performance (net of fees). It shows their performance against their specific benchmarks over one year, three years and five years. The performance of the global property portfolio is measured using the Internal Rate of Return since inception as the performance is impacted by the dilution effect of investing monies during the investment phase of the portfolio. As this portfolio matures and cash is returned to the Fund, the Internal Rate of Return should improve. 7. Largest Holdings

The ten largest investment holdings of the Fund at 31 March 2019 are shown in Table 23.

8. Investment Administration

The Fund’s custodian is responsible for the safe–keeping of the Fund’s assets and acts as the Fund’s bank, settling transactions and collecting

income. In addition they provide a range of support services including stock lending and investment accounting. The Fund has a separate bank account which provides transparency and accountability of the Fund’s and Council’s banking arrangements. In addition the Fund has a separate Treasury Management Policy which ensures the investment of the Fund’s cash is consistent with the risk parameters of the Fund. The management of the pension fund’s investment cash is delegated to the Council. 9. Investment Cost Transparency

The Code of Transparency (‘The Code’) framework provides greater transparency of the total investment fees and costs for each investment mandate. This is particularly significant for the pooled fund mandates where all the costs are charged to the underlying assets. The Fund includes estimated management fees for all pooled investments in the Statement of Accounts but other fees and transaction costs are not included. The value of assets and performance data is stated after all costs and therefore the fuller cost disclosure does not affect investment performance or the value of assets.

Asset Pool Non-Asset Pool Fund TotalDirect Indirect Total Direct Indirect Total£000s £000s £000s Bps £000s £000s £000s Bps £000s Bps

Management Fees - 258 258 3.5 4,155 15,084 19,239 47.7 19,497 40.9Performance Fees - - - - 5,765 - 5,765 14.3 5,765 12.1Indirect and Other Fees - 117 117 1.6 470 560 1,030 2.6 1,147 2.4Total fees - 375 375 5.1 10,390 15,644 26,034 64.5 26,408 55.4Asset pool shared costs 1,017 - 1,017 13.8 - - - - 1,017 2.1Transaction costs:Transaction taxes - 39 39 0.5 590 335 924 2.3 963 2.0Booker commision - 56 56 0.8 259 1,352 1,612 4.0 1,668 3.5Implicit costs - 8 8 0.1 442 1,324 1,766 4.4 1,773 3.7Entry/ exit charges - 51 51 0.7 - - - - 51 0.1Indirect transaction costs - 14 14 0.2 1,099 434 1,532 3.8 1,546 3.2Other transaction costs - -51 -51 -0.7 - 16 16 0.0 -35 -0.1Total transaction costs - 116 116 1.6 2,389 3,460 5,850 14.5 5,966 12.5Total of all fees and costs

1,017 491 1,508 20.5 12,779 19,104 31,883 79.0 33,392 70.0

Table 24: LGPS Code of Transparency (Investment management costs for year to Marh 31 2019)


Standardised disclosure templates have been provided to those managers that have signed up to the Code. These were only issued in May 2019 which means that for 2018-19 the Fund has not received data from all its managers, particularly for the alternative and private market mandates as the templates were the last to be developed. Brunel has signed up to the Code and expects all managers they appoint for their portfolios to also be signatories.

Where full disclosure has not been provided only the base management and performance fees have been included. 70% of the managers provided full disclosure including the Fund’s five segregated mandates and nine pooled fund managers. Cost reporting for private markets assets does not extend beyond management fees but all of the Fund’s private markets managers have stated their intention to submit data for next year.

Direct costs are those costs that are directly invoiced to the Fund or incurred by the segregated mandates and recorded in the custody account. Indirect costs are those charged to the underlying investments, mainly in pooled mandates. The fee rates in basis points (bps) shown in the table are the fees and costs expressed as

a percentage of the value of the assets.

The table shows the costs for assets held within the Brunel asset pool and those still managed directly by the Fund. The assets held within the pool are low cost passive equities and actively managed UK equities, with small investments in Secured Income and Infrastructure. Therefore the management fees are lower than for the actively managed portfolios that remain outside the pool.

Performance fees in the year of £5.7 million were paid to the Fund’s infrastructure and global property managers. In the Statement of Accounts the performance fee has been adjusted for overprovisioning in previous years.

The Asset Pool shared costs represent the Brunel fees for managing and operating the pool and also includes consultancy costs associated with administering the Brunel client and oversight arrangements. Transaction costs include broker commissions, transactions taxes, implicit costs, indirect transaction costs and other transaction costs. The costs associated with the transition of assets to Brunel are not included in this analysis.


Funding Strategy

Funding Position

In line with the LGPS regulations, the Fund’s funding position is reviewed every three years. The latest triennial valuation based on membership data and asset values as at 31 March 2016, set the employer contribution rates and deficit payment plans for the period from 1 April 2017 to 31 March 2020.

The 2016 valuation produced a funding level (the coverage of liabilities by the assets) of 86% which was an improvement on the funding level of 78% at the previous valuation in 2013. In monetary terms the deficit fell from £876 million in 2013 to £618 million in 2016. The improvement in the funding level and deficit was due to following:

• A higher than expected investment return over the 3 years (5.6% p.a. compared to the assumption in the 2013 valuation of 4.8%)

• Maintaining the discount rate of CPI +2.2% that was used in the 2013 valuation

The Future Service Rate (FSR) which is used to value future benefit accruals rose to reflect the fact that investment returns in the future may be lower given that gilt yields have fallen to historic lows. To build in

greater prudence into the FSR, the discount rate was lowered from CPI +3% (used in 2013 valuation) to CPI +2.75%. The result was to increase the average FSR from 13.9% (in 2013 valuation) to 15.3%.

The historical funding level and asset allocation for the last six valuations is shown in the table below: The funding level will vary over time. The value of the assets and liabilities will vary due to changes in market prices. The non-financial assumptions that determine the liabilities will also change over time, such as longevity or the length of time it is assumed pensions will be paid over the retirement age.

Between the triennial valuations the Committee monitors the funding position each quarter. In addition, an interim valuation is undertaken the year before the next triennial valuation to provide employers with an indication of the potential impact of the next valuation on their budget to help them plan accordingly and to consider potential changes required to the Funding Strategy Statement.

The key assumption which drives the value of the pension liabilities (the future benefit payments), and therefore the deficit, is the discount rate which needs to reflect the

overall real investment return which the investment assets are expected to achieve over the long term with a suitable allowance for prudence.

Given the strong performance of asset prices since the 2016 valuation, the future expected return on assets for the Fund’s investment strategy has fallen. As a result in the 2018 interim valuation the Actuary advised that the discount rate used to value the liabilities in the 2019 valuation will be lower than in the 2016 valuation. This will have a greater impact on the future service rate which will increase as a result. However, there are other factors that may partially offset the increase including a reduction in the longevity assumption as a result of the Fund’s mortality experience since 2016 and a slowing in the rate of improvement in longevity.

As at 31 March 2019, the estimated funding level has remained stable at 96%.

The pension fund is maturing gradually and the investment and funding strategies takes this into account. As monthly pensions paid to pensioners exceed contributions received from employers and members, the Fund uses investment income to pay the pensions. The cash flow forecast is included in the Fund’s Service Plan which is

Table 25: Funding level and asset allocation for the last six valuations

Valuation result 2001 2004 2007 2010 2013 2016Value of Assets £m 1,563 1,474 2,184 2,459 3,146 3,737Value of Liabilities £m 1,572 1,841 2,643 3,011 4,023 4,355Funding level 99% 80% 83% 82% 78% 86%Asset Allocation % 2001 2004 2007 2010 2013 2016Equities 75% 74% 77% 63% 63% 50%Bonds 25% 24% 21% 22% 20% 21%Diversified Growth Funds - - - - - 10%Property - - - 4% 7% 10%Hedge Funds - - - 9% 7% 5%Cash - 2% 2% 2% 3% 4%


revised annually. Actual cash flow is monitored against the forecast to manage cash requirements on a monthly basis.

Funding Strategy Statement (FSS)

The FSS is revised each valuation to set the parameters for that valuation. As the 2016 valuation was completed during a particularly difficult time for public sector bodies due to the contraction in public sector funding, the 2016 FSS reflected the need to balance the long term solvency of the Fund with cashflow pressures faced by the scheme employers over the three year valuation period (to 2019/20).

The regulations in force in 2016 provided that the FSS must:

• establish a clear and transparent fund-specific strategy which will identify how employers’ pension liabilities are best met going forward by taking a prudent longer-term view of funding those liabilities

• establish contributions at a level to “secure the solvency of the pension fund” and the “long term cost efficiency”

• have regard to the desirability of maintaining as nearly constant a primary rate of contribution (employer contribution rate) as possible

Using the flexibility provided within this framework, in 2016 the Fund kept increases in employer contribution rates to a minimum. The improved funding position meant that increases in deficit payments were minimised and that the average deficit recovery period contracted by three years to 17 years (from 20 in 2013). When setting contribution rates and deficit recovery periods for individual employers or groups of employers, the Actuary takes into account an assessment of financial strength and funding sources undertaken by the Fund.

The Future Service Rate (the on-going cost of one year’s pension accrual) is expressed as a percentage of pensionable pay. However, to ensure there is no significant underpayment of deficit recovery contributions should payrolls contract during the valuation period, deficit recovery contributions (or past service contributions) are expressed in annual monetary amounts.

The number of employers in the Fund continued to increase due to the creation of academies and the outsourcing of services by scheme employers. As schedule bodies, academies have an automatic right to join the scheme. Employers outsourcing services to an admitted body are required to guarantee the

liabilities of the admitted body.To reduce the risk of a significant increase in liabilities due to early retirements under the ill-health regulations for smaller employing bodies, a “captive” insurance scheme has been introduced to manage this increase in costs for these employers.

The 2016 FSS was compiled in accordance with the relevant statutory guidance. It includes all policies relating to the funding of employer liabilities as well as admission and termination policies.

The FSS will be reviewed as part of the 2019 valuation and will be consulted on with scheme employers before being published later in 2019.

The 2016 Funding Strategy Statement is in Appendix G and can be obtained from the website www.avonpensionfund.org.uk (search Funding Strategy Statement)


This statement has been provided to meet the requirements under Regulation 57(1)(d) of The Local Government Pension Scheme Regulations 2013.

An actuarial valuation of the Avon Pension Fund was carried out as at 31 March 2016 to determine the contribution rates with effect from 1 April 2017 to 31 March 2020.

On the basis of the assumptions adopted, the Fund’s assets of £3,737 million represented 86% of the Fund’s past service liabilities of £4,355 million (the “Funding Target”) at the valuation date. The deficit at the valuation was therefore £618 million.

The valuation also showed that a Primary contribution rate of 15.6% of pensionable pay per annum was required from employers. The Primary rate is calculated as being sufficient, together with contributions paid by members, to meet all liabilities arising in respect of service after the valuation date.

The funding objective as set out in the Funding Strategy Statement (FSS) is to achieve and then maintain a solvency funding level of 100% of liabilities (the solvency funding target). In line with the FSS, where a shortfall exists at the effective date of the valuation a deficit recovery plan will be put in place which requires additional contributions to correct the shortfall (or contribution reductions to refund any surplus).

The FSS sets out the process for determining the recovery plan in respect of each employer. At this actuarial valuation the average deficit recovery period is 16 years, and the total initial recovery payment (the “Secondary rate”) for 2018/19 is approximately £13 million (this allows for some employers to phase in any increases or to make a prepayment in April 2017). For all employers, the Secondary rate will increase at 3.7% per annum, except where phasing has been applied. With the agreement of the Administering Authority employers may also opt to pay some of their employer contributions early (after suitably agreed reductions), with either all three years being paid in April 2017 or payment being made in the April of the year in question.

Further details regarding the results of the valuation are contained in the formal report on the actuarial valuation dated 31 March 2017.

In practice, each individual employer’s position is assessed separately and the contributions required are set out in the report. In addition to the certified contribution rates, payments to cover additional liabilities arising from early retirements (other than ill-health retirements) will be made to the Fund by the employers.

The funding plan adopted in assessing the contributions for each individual employer is in accordance with the Funding Strategy Statement (FSS). Any different approaches adopted, e.g. with regard to the implementation of contribution increases and deficit recovery periods, are as determined through the FSS consultation process.

The valuation was carried out using the projected unit actuarial method and the main actuarial assumptions used for assessing the Funding Target and the Primary rate of contribution were as follows:

Statement of the Consulting Actuary


For past service liabilities (Funding Target)

For future service liabilities (Common Contribution Rate)

Rate of return on investments (discount rate) 4.4% per annum 4.95% per annum

Rate of pay increases 3.7% per annum* 3.7% per annum

Rate of increases in pensions in payment (in excess of Guaranteed Minimum Pension) 2.2% per annum 2.2% per annum

* allowance was also made for short-term public sector pay restraint over a 4 year period.

The assets were assessed at market value.

The next triennial actuarial valuation of the Fund is due as at 31 March 2019. Based on the results of this valuation, the contribution rates payable by the individual employers will be revised with effect from 1 April 2020.

Actuarial Present Value of Promised Retirement Benefits for the Purposes of IAS 26

IAS 26 requires the present value of the Fund’s promised retirement benefits to be disclosed, and for this purpose the actuarial assumptions and methodology used should be based on IAS 19 rather than the assumptions and methodology used for funding purposes.

To assess the value of the benefits on this basis, we have used the following financial assumptions as at 31 March 2019 (the 31 March 2018 assumptions are included for comparison):

31 March 2018 31 March 2019

Rate of return on investments (discount rate) 2.6% per annum 2.4% per annum

Rate of pay increases* 3.6% per annum 3.7% per annum

Rate of increases in pensions in payment (in excess of Guaranteed Minimum Pension) / Deferred revaluation

2.2% per annum 2.3% per annum

Rate of CPI Inflation / CARE Benefit revaluation 2.1% per annum 2.2% per annum

* includes a corresponding allowance to that made in the latest formal actuarial valuation for short-term public sector pay restraint.

The demographic assumptions are the same as those used for funding purposes. Full details of these assumptions are set out in the formal report on the actuarial valuation dated 31 March 2017.

During the year, corporate bond yields decreased slightly, resulting in a lower discount rate being used for IAS 26 purposes at the year-end than at the beginning of the year (2.4% p.a. versus 2.6% p.a.). The expected long-term rate of CPI inflation increased during the year, from 2.1% p.a. to 2.2%. Both of these factors served to increase the liabilities over the year.

The value of the Fund’s promised retirement benefits for the purposes of IAS 26 as at 31 March 2018 was estimated as £6,453 million. Interest over the year increased the liabilities by c£169 million, and allowing for net benefits accrued/paid over the period also increased the liabilities by c£72 million (after allowing for any increase in liabilities arising as a result of early retirements/augmentations). We have also included an amount of £40 million by way of an estimate of the effect of the McCloud judgement (see note below for further details). There was then an increase in liabilities of £368 million due to “actuarial gains” (i.e. the effect of changes in the actuarial assumptions used, referred to above).

The net effect of all the above is that the estimated total value of the Fund’s promised retirement benefits as at 31 March 2019 is therefore £7,102 million.


Paul MiddlemanFellow of the Institute and Faculty of ActuariesMercer LimitedJuly 2019

Mark WilsonFellow of the Institute and Faculty of ActuariesMercer LimitedJuly 2019

The McCloud Case

In December 2018 the Court of Appeal ruled against the Government in the two linked cases of Sargeant and McCloud (which for the purposes of the LGPS has generally been shortened to “McCloud”), relating to the Firefighter unfunded pension schemes and the Judicial pension arrangements. In essence, the Court held that the transitional protections, which were afforded to older members when the reformed schemes were introduced in 2015, constituted unlawful age discrimination. The Government attempted to appeal the cases, but it was announced on 27 June 2019 that the appeal had been refused by the Supreme Court. Remedial action in the formof increases in benefits for some members of the Firefighter and Judicial arrangements will almost certainly be required. There may well also be knock-on effects for the other public service schemes, and the LGPS might therefore also be required to take some action. At this stage it is unclear what the extent of any potential remedial action might be.

We have carried out some costings of the potential effect of McCloud as at 31 March 2019, based on the individual member data as supplied to us for the 2016 actuarial valuation, and this results in an additional liability of £40 million using the IAS26 assumptions outlined above. The approach to the calculations is as instructed by the administering authority after consideration of the categories of members potentially affected, but in very broad terms calculates the cost of applying a “final salary underpin” (on a member by member basis) to those active members who joined the Fund before 1 April 2012 and who would not otherwise have benefited from the underpin.

GMP Equalisation

UK and European law requires pension schemes to provide equal benefits to men and women in respect of service after 17 May 1990 (the date of the “Barber” judgment) and this includes providing equal benefits accrued from that date to reflect the differences in GMPs. Previously, there was no consensus or legislative guidance as to how this might be achieved in practice for ongoing schemes, but the 26 October 2018 Lloyds Bank court judgement has now provided further clarity in this area. However, in response to this judgement HM Treasury stated that “public sector schemes already have a method to equalise guaranteed minimum pension benefits, which is why we will not have to change our method as a result of this judgment”, clearly implying that the Government (who have the overall power to determine benefits provision) believe the judgement itself will not affect the benefits. Therefore, the natural conclusion for the main public service pension schemes including the Local Government Pension Scheme is that it is not appropriate for any provision to be included for the effect of the Lloyds Bank judgment, at least at the present time, and so we have not made any allowance for any additional liabilities within the above figures at this stage. However, in due course there may be a further cost to the LGPS in connection with equalisation/indexation, when the Government confirms the overall approach which it wishes to adopt in this area following its consultation.


Employer Contribution Rates

Participating EmployersYear Ended 31 March 2019 2018/19 Employee

contributions% of pay

2018/19 Employer contributions plus Deficit / (surplus)

amount

Scheduled BodiesPrincipal Councils and Service ProvidersAvon Fire & Rescue Service £309,067 14.7 £370,700Bath & North East Somerset Council n.b. includes St Gregory’s £3,795,316 15.2 -City of Bristol Council £11,109,984 15.0 -North Somerset Council £2,498,941 15.2 £4,212,460South Gloucestershire Council £5,478,268 15.5 -West of England Combined Authority £230,100 13.0 -

Further & Higher Education EstablishmentsBath Spa University £912,596 13.8 £702,700Bath College £179,576 14.6 £166,600City of Bristol College £395,295 15.5 £594,700South Gloucestershire & Stroud College £539,122 13.6 £453,300St. Brendan's Sixth Form College £97,531 14.9 -University of the West of England £3,886,547 14.2 £2,441,660Weston College n.b. includes Offender Learning Service £543,923 13.1 £347,240

Academies and SchoolsAbbeywood Community School £52,431 15.1 £41,900Abbot Alphege Academy £2,239 20.0 -Ashcombe Primary School £42,761 14.8 £76,800Ashton Park School £42,454 16.2 £51,675Ashton Vale Primary School £7,869 17.7 £10,800Aspire Academy £20,207 12.9 £39,340Backwell C of E Junior School £8,190 21.7 £13,400Backwell School £72,980 17.1 £157,100Badock's Wood E-ACT Academy £9,833 14.0 £11,783Bannerman Road Community Academy £20,409 13.5 £20,700Barton Hill Academy £30,900 12.9 £26,200Bathampton Primary School £9,881 18.9 £12,000Batheaston Church School £12,462 17.9 £19,600Bathford Church School £8,935 17.2 £10,500Bathwick St Mary Church School £9,577 18.4 £11,800Becket Primary School £20,927 19.1 £36,100Bedminster Down School £42,606 14.6 £34,500Beechen Cliff School £60,781 16.4 £46,700Begbrook Primary Academy £29,209 15.7 £19,970Birdwell Primary School £21,994 15.9 £25,400Bishop Sutton Primary School £1,989 18.2 £2,800





amount

Bournville Primary Academy £82,676 15.6 £119,400Bradley Stoke Community School £66,356 15.1 £89,400Bridge Learning Campus £67,604 14.5 £69,700Bristol Cathedral School Trust £71,078 13.8 £3,000Bristol Free School £37,568 13.9 £2,600Bristol Futures Academy £13,245 7.0 (£100)Bristol Technology & Engineering Academy £9,448 13.0 £400Broadlands Academy £41,299 15.1 £40,800Broadoak Mathematics & Computing College £55,020 16.0 £82,700Cabot Learning Federation £290,081 13.9 £69,190Callicroft Primary School £21,299 15.1 £23,000Castle Batch Primary School £26,960 17.5 £64,300Chandag Infant School £8,157 15.0 £9,007Chandag Junior School £7,484 18.6 £12,531Charborough Road Primary School £13,064 15.1 £20,100Charfield Primary School £6,995 19.4 £8,600Cheddar Grove Primary School £4,552 17.5 £5,800Chew Stoke Church School £10,510 16.0 £5,800Chew Valley School £49,267 18.1 £56,700Christ Church C of E Primary School (Bristol) £14,607 16.5 £13,000Christ Church C of E Primary School (WSM) £16,342 19.1 £28,100Churchill Academy £58,572 14.8 £117,200City Academy £71,480 12.9 £43,750Clevedon School £71,851 14.8 £67,500Clutton Primary School £6,437 21.6 £8,000Colston's Girls' School £16,568 14.8 (£5,000)Combe Down C of E Primary School £19,433 16.7 £30,700Compass Point South Street Primary School £13,764 15.9 £18,300Cotham Gardens Primary School £24,771 13.6 £10,500Cotham School £95,541 14.7 £88,100Court de Wyck Church School £5,666 20.6 -Crockerne C of E Primary School £18,650 17.7 £45,100Culverhill School £39,240 20.0 £39,900Digitech Studio School £9,423 13.9 (£100)Diocese of Bristol Academy Trust £22,519 15.8 £400Downend School £46,156 16.3 £43,300Dundry C of E Primary School £5,254 22.8 £2,300East Harptree Primary School £977 17.5 £800Easton C of E Academy £39,122 15.8 £48,100Elmlea Junior School £15,085 16.4 -Endeavour Academy Trust £13,231 13.5 -Evergreen Primary Academy £8,048 15.7 £13,700Fairfield High School £51,616 15.4 £69,400Fairlawn Primary School £7,718 13.6 (£100)Farmborough Church Primary School £6,464 16.6 £10,300





amount

Farrington Gurney C of E Primary School £5,505 16.1 £10,000Federation of Hannah More Infant School £8,234 16.9 £16,700Filton Avenue Primary School £48,667 12.8 £33,100Filton Hill Primary School £9,170 15.1 £13,200Fishponds Church of England Academy £27,497 15.8 £26,200Flax Bourton Primary School £3,633 20.1 £4,300Fonthill Primary School £9,752 13.5 £16,600Fosse Way School £91,345 13.5 £75,600Four Acres Academy £26,852 14.5 £31,700Freshford Church School £4,832 21.6 £5,600Frome Vale Academy £7,617 14.7 £12,040Gatehouse Green Learning Trust £68,026 13.7 £87,400Gordano School £96,660 17.0 £146,100Greenfield E-ACT Primary Academy £26,084 14.0 £22,000Grove Junior School £10,852 22.1 £15,100Hanham Woods Academy £43,005 16.6 -Hans Price Academy £59,366 14.3 -Hareclive E-ACT Academy £22,274 14.0 £31,800Hayesfield Girls School £60,046 16.8 -Haywood Village Academy £15,706 15.9 -Headley Park Primary School £28,826 17.1 £38,400Henbury Court Primary Academy £28,496 13.5 £37,190Henbury School £46,504 14.7 £37,300Henleaze Junior School £8,271 13.6 £16,000Heron’s Moor Academy £21,800 14.5 £25,200High Down Infant School £15,024 16.1 £37,200High Down Junior School £18,654 19.5 £41,800High Littleton C of E Primary School £8,989 15.6 £7,500Hotwells Primary School £10,357 16.0 £15,300Hutton C of E Primary School £10,864 16.5 £25,500IKB Academy £4,670 14.0 -Ilminster Avenue E-ACT Academy £18,873 14.0 £8,700Kings Oak Academy £57,756 16.0 £54,610Kingshill Church School £10,538 16.4 -Knowle DGE Academy £76,136 15.5 £73,600Lansdown Park Academy £16,177 15.5 £8,700Little Mead Primary Academy £38,351 13.5 £24,570Locking Primary School £19,839 16.4 £29,900Longvernal Primary School £10,423 16.8 £3,900Luckwell Primary School £7,767 19.6 £10,950Lyde Green Primary School £8,067 20.0 -Mangotsfield School £51,435 17.1 £77,200Marksbury C of E Primary School £4,901 14.8 £6,000Marlwood School £25,719 17.1 £57,200Mary Elton Primary School £21,396 17.0 £29,100





amount

Mead Vale Community Primary School £28,955 16.9 £49,800Meadowbrook Primary School £16,515 15.1 £35,500Mendip Green Primary School £27,079 16.9 £47,200Merchants' Academy £73,186 15.1 £14,580Midsomer Norton Primary School £18,985 16.0 £24,100Midsomer Norton Schools Partnership £122,922 17.0 £143,300Milton Park Primary School £23,666 15.7 £63,400Minerva Primary Academy £18,625 16.9 £12,140Moorlands Infant School £7,921 18.6 £8,400Moorlands Junior School £7,540 17.6 £9,300Mulberry Park Educate Together Primary £546 20.0 -Nailsea School £55,809 18.6 £64,700New Siblands School £40,963 14.3 £52,100North Somerset Enterprise & Technology College £9,247 11.6 (£700)Northleaze C of E Primary School £10,821 18.6 £23,500Notton House Academy £59,361 15.5 £71,200Oasis Academy Bank Leaze £10,524 12.5 £12,200Oasis Academy Brightstowe £47,911 13.7 £43,000Oasis Academy Brislington £41,109 16.3 £102,000Oasis Academy Connaught £24,176 14.2 £14,900Oasis Academy John Williams £65,192 13.6 £4,900Oasis Academy Long Cross £41,230 15.5 £44,400Oasis Academy Marksbury Road £20,990 14.7 -Oasis Academy New Oak £19,488 13.4 £22,500Oldfield Park Infant School £10,110 18.1 £17,400Oldfield Park Junior School £9,951 19.7 £10,900Oldfield School £40,785 15.5 -Oldmixon Primary School £20,401 15.9 £48,400Olympus Academy Trust £46,797 15.1 -Orchard School Bristol £40,568 14.8 £50,600Parklands Educate Together Primary £1,464 20.0 -Parson Street Primary School £26,688 15.4 £21,700Patchway Community School £31,202 18.9 £68,000Peasedown St John Primary School £26,463 16.5 £43,900Perry Court E-ACT Academy £20,597 14.0 £38,200Portishead Primary School £27,472 15.7 £41,100Priory Community School £126,041 14.9 -Ralph Allen School £68,318 16.9 £54,500Redfield Educate Together Primary Academy £21,200 11.2 £300Roundhill Primary School £9,407 17.1 £12,500Saltford C of E Primary School £14,176 17.9 £14,580Severn Beach Primary School £5,963 20.6 £10,100SGS Pegasus School £9,712 20.0 -Shoscombe Church School £2,177 19.2 £2,200Sir Bernard Lovell Academy £43,217 15.7 £78,200





amount

Somerdale Educate Together Primary Academy £3,307 20.0 -St Andrew's Church School £13,572 15.5 £19,000St Anne's C of E VA Primary School £32,543 12.8 £29,100St Bede's Catholic College £42,998 14.7 £49,500St Georges Church School £12,908 18.7 -St John The Evangelist Church School £10,880 18.0 -St John's C of E Primary School (Keynsham) £8,117 17.7 £10,470St John's C of E Primary School (MSN) £20,036 16.9 £24,100St Julian's C of E Primary School £1,874 19.2 £2,400St Katherine's School £39,983 17.1 £82,500St Mark's Ecumenical Anglican/Methodist Primary School £21,877 15.7 -St Martin's C of E Primary School £35,353 16.8 £61,900St Martin's Garden Primary School £21,744 14.9 £43,600St Mary Redcliffe C of E Primary School £24,028 15.8 £31,500St Mary's C of E VA Primary School £4,214 16.6 £6,000St Matthias Academy £13,192 15.5 £17,700St Michael's C of E Junior Church School £12,109 20.4 £12,800St Nicholas Chantry C of E VC Primary School £18,294 17.6 £28,800St Nicholas of Tolentine Catholic School £13,205 13.4 £13,600St Patrick’s Catholic Primary School £12,113 17.5 -St Peter's C of E Primary School £27,413 15.8 £30,440St Philip's C of E Primary School £13,684 17.3 £22,900St Saviours Infant Church School £12,414 16.1 £16,300St Saviours Junior Church School £6,423 15.6 £7,400St Stephen's Primary Church School £15,700 19.5 £20,100St Teresa’s Catholic Primary School £12,795 15.3 £13,800St Ursula's E-ACT Primary Academy £61,163 14.0 £1,100Stanton Drew Primary School £960 18.4 £1,200Steiner Academy Bristol £9,890 14.0 (£300)Stoke Bishop C of E Primary School £21,379 16.5 -Stoke Lodge Primary School £20,449 15.1 £30,200Summerhill Academy £18,862 17.2 £12,140The Bath Studio School £3,196 9.2 (£700)The Castle School £70,908 17.5 £86,100The Dolphin School £18,657 9.9 £500The Kingfisher School £9,818 17.0 £13,000The Meadows Primary School £7,015 16.9 £8,615Three Ways School £98,617 12.1 £66,400Tickenham C of E Primary School £3,927 11.2 £1,100Trinity Anglican Methodist Primary School £18,573 14.7 -Trinity Church School £16,629 11.9 £8,500Trust in Learning £20,127 11.2 £4,900Ubley Primary School £1,234 19.6 £1,900Venturers' Academy £35,612 15.1 -Venturers' Trust £60,783 14.8 -





amount

Victoria Park Primary School £25,734 16.6 £34,900Walliscote Primary School £20,821 16.1 £39,800Wallscourt Farm Academy £15,857 13.8 £100Wansdyke Primary School £4,425 16.3 £5,700Waycroft Academy £41,065 15.7 £35,100Wellsway School £103,766 15.6 £50,990Welton Primary School £9,971 16.6 £19,400West Leigh Infant School £6,299 19.9 £14,300West Town Lane Academy £41,696 14.6 £28,300Westbury Park Primary School £22,673 16.4 £17,500Westbury-on-Trym C of E Academy £19,975 16.3 £21,800Westfield Primary School £10,793 16.2 £11,800Weston All Saints C of E Primary School £38,117 17.2 £41,300Wicklea Academy £11,068 16.3 £12,400Widcombe C of E Junior School £11,398 17.2 £11,200Widcombe Infant School £8,444 16.3 £20,000Windwhistle Primary School £40,368 16.9 £77,600Winford CofE Primary School £2,358 16.4 £3,975Winterbourne International Academy £62,311 15.1 (£6,300)Woodlands Academy £14,275 13.1 £5,400Worle Community School £79,312 17.5 £122,900Worle Village Primary School £12,288 17.5 £13,800Wraxall C of E Voluntary Aided Primary School £2,504 17.5 £4,700Writhlington School £93,838 13.7 £90,700Yate Academy £58,952 15.3 £22,100Yatton C of E Junior School £13,702 17.9 £22,400Yatton VC Infant School £17,102 17.0 £29,800Yeo Moor Primary School £21,508 18.2 £22,500

Designating BodiesAlmondsbury Parish Council £5,321 17.7 -Backwell Parish Council £2,144 21.0 -Bradley Stoke Town Council £15,415 19.6 -Bristol Waste Company £80,541 20.7 £600Charter Trustees of the City of Bath £3,210 15.1 (£1,500)Clevedon Town Council £4,201 19.4 -Congresbury Parish Council £1,281 17.2 £100Destination Bristol £23,862 13.9 -Dodington Parish Council £4,560 20.7 £1,570Downend and Bromley Heath Parish Council £2,588 16.0 £400Emersons Green Town Council £2,410 18.6 -Filton Town Council £32,353 14.6 (£6,400)Frampton Cotterell Parish Council £4,896 20.4 £2,300Hanham Abbots Parish Council £947 14.3 £200Hanham Parish Council £989 18.7 £2,200





amount

Keynsham Town Council £13,936 19.1 £15,270Midsomer Norton Town Council £4,285 18.2 £8,900Nailsea Town Council £9,393 20.4 £6,300Oldland Parish Council £5,205 17.6 £1,300Patchway Town Council £14,673 18.6 (£5,900)Paulton Parish Council £5,987 17.3 (£2,000)Peasedown St John Parish Council £4,825 14.4 £900Pill & Easton in Gordano Parish Council £1,446 17.4 £300Portishead Town Council £6,603 17.1 £5,200Radstock Town Council £3,368 13.4 £4,700Saltford Parish Council £739 22.9 £500Sodbury Parish Council £3,562 20.0 -Stoke Gifford Parish Council £9,242 14.4 (£3,000)Stoke Lodge & the Common Parish Council £585 20.0 -Thornbury Town Council £16,345 22.4 £14,700Visit Bath Ltd £3,111 20.6 -Westerleigh Parish Council £543 17.9 (£1,900)Westfield Parish Council £1,948 16.8 -Weston Super Mare Town Council £34,606 15.5 £10,500Whitchurch Parish Council £940 18.6 £200Winterbourne Parish Council £1,133 26.3 £1,200Yate Town Council £34,467 13.2 -Yatton Parish Council £4,413 21.6 £700

Community Admission BodiesAdoption West - 15.7 -Alliance Homes £139,910 19.0 £112,300Ashley House Hostel £18,595 24.2 £10,500Bristol Music Trust £21,491 19.2 £11,300Clifton Suspension Bridge Trust £11,195 20.8 £5,200Disability Equality Forum £830 25.7 (£500)Learning Partnership West Ltd £4,142 23.9 (£67,300)Merlin Housing Society Ltd (New staff since 2007) £179,521 25.1 £69,600Merlin Housing Society Ltd (SG) £84,848 18.7 (£111,000)Sirona Care & Health CIC (2017) £101,061 21.4 -Southwest Grid for Learning Trust £11,030 11.4 £31,500The Care Quality Commission £18,410 21.7 £66,900The Holburne Museum £6,307 18.4 £25,200The Park Community Trust Ltd £8,652 20.5 (£5,300)University of Bath £1,202,208 15.1 -Vision North Somerset CIO £7,775 19.6 £14,300West of England Sport Trust (WESPORT) £14,240 22.9 £21,200Writhlington Trust £9,736 25.8 -





amount

Transferees Admitted BodiesABM Catering Limited £2,872 21.9 -Active Community Engagement Ltd £5,936 22.6 £800Agilisys Limited £39,581 21.3 £18,100Agilysis Limited 2015 £48,741 20.6 £44,700Alliance in Partnership Limited - Westbury on Trym C of E Academy £383 17.0 -

Alliance Living Care Limited £4,860 22.3 -Aspens Services Limited - Abbeywood Community School £1,985 21.4 -Aspens Services Limited - Bannerman Road Community Academy £303 26.0 -

Aspens Services Limited - Barrs Court Primary School £683 22.0 -Aspens Services Limited - Beacons Rise Primary School £1,203 21.5 -Aspens Services Limited - Begbrook Primary Academy £853 20.0 (£200)Aspens Services Limited - Bishop Sutton & Stanton Drew Schools (Federated) £1,172 23.6 -

Aspens Services Limited - Blackhorse Primary School £1,237 20.4 -Aspens Services Limited - Bradley Stoke Community School £1,277 20.5 -Aspens Services Limited - Castle Primary School (Keynsham) £949 19.4 -Aspens Services Limited - Castle School Education Trust £1,907 19.9 -Aspens Services Limited - Charborough Primary School £1,714 17.2 -Aspens Services Limited - Charfield School £793 21.2 -Aspens Services Limited - Cherry Garden Primary School £410 21.0 -Aspens Services Limited - Christchurch Hanham CofE Primary School £455 17.0 -

Aspens Services Limited - Culverhill School £646 15.3 -Aspens Services Limited - Downend School £1,973 21.0 -Aspens Services Limited - East Harptree Primary School £186 22.0 -Aspens Services Limited - Frampton Cottrell School £1,339 23.2 -Aspens Services Limited - Frome Vale Academy £685 21.1 (£100)Aspens Services Limited - Hanham Abbotts Junior School £2,589 21.5 -Aspens Services Limited - Hanham Woods Academy £1,031 19.5 -Aspens Services Limited - Kings' Forest Primary School £724 18.3 -Aspens Services Limited - King's Oak Academy £2,525 24.0 (£900)Aspens Services Limited - Longwell Green Primary School £834 17.0 -Aspens Services Limited - Mangotsfield School £2,461 18.5 -Aspens Services Limited - Marlwood School £1,418 18.1 -Aspens Services Limited - Meadowbrook Primary School £878 20.1 -Aspens Services Limited - Minerva Academy £1,334 23.3 -Aspens Services Limited - New Horizons Learning Centre £127 13.2 -Aspens Services Limited - Patchway Community College £696 19.4 -Aspens Services Limited - Redland Green Academy £1,949 21.3 -Aspens Services Limited - Shirehampton Primary School £531 27.4 -Aspens Services Limited - St Barnabus CofE Primary School £580 20.3 -Aspens Services Limited - Staple Hill Primary School £432 20.1 -Aspens Services Limited - Stoke Lodge and Callicroft* £1,944 16.1 -





amount

Aspens Services Limited - Summerhill Academy £622 23.7 -Aspens Services Limited - The Tynings School £822 15.7 -Aspens Services Limited - Ubley Primary School £257 30.0 -Aspens Services Limited - Warmley Park Primary School £1,501 18.5 -Ategi limited £765 18.7 -BAM Construct UK Ltd £11,159 22.7 £2,700Bespoke Cleaning Services Limited - Castle School Education Trust (CSET) £2,853 22.0 -

Bespoke Cleaning Services Limited - Olympus Academy Trust (OAT) £1,101 19.3 -

Churchill Contract Services Ltd - Cabot Learning Federation £0 21.1 -Churchill Contract Services Ltd - Golden Valley Primary School £284 24.5 -

Churchill Contract Services Ltd - South Gloucestershire & Stroud College £443 22.4 -

Churchill Contract Services Ltd - Westhaven School £308 23.5 -Circadian Trust £98,001 16.8 £107,460Compass Contract Services (UK) Ltd - Ashton Park School £2,663 23.6 -Compass Contract Services (UK) Ltd - Bristol Cathedral Choir School £543 17.5 -

Compass Contract Services (UK) Ltd - Bristol City Council £22,567 21.0 -Compass Contract Services (UK) Ltd - Cathedral Schools Trust (BCCfw) £2,499 22.9 -

Compass Contract Services (UK) Ltd - Diocese of Bristol Academies Trust (BCCfw) £2,285 21.6 -

Compass Contract Services (UK) Ltd - Luckwell Primary School £336 23.4 -

Compass Contract Services (UK) Ltd - Palladian Academy Trust £1,959 20.1 -

Compass Contract Services (UK) Ltd - South Gloucestershire and Stroud College £1,056 24.4 -

Compass Contract Services (UK) Ltd - St Bede's Academy (BCCfw) £2,274 25.8 -

Compass Contract Services (UK) Ltd - St Patrick's Catholic Primary School (BCCfw) £827 21.4 -

Compass Contract Services (UK) Ltd - St Teresa's Catholic Primary School (BCCfw) £818 23.6 -

Compass Contract Services (UK) Ltd - Westbury Park Primary School (BCCfw) £1,179 18.4 -

Creative Youth Network £1,095 18.9 -Direct Cleaning Services (South West) Limited - Newbridge Primary School £372 14.3 -

Dolce Ltd - Filton Hill Primary School £844 19.3 -Dolce Ltd - Mangotsfield C of E Primary School £1,892 19.9 -Edwards and Ward Ltd - Bath & Wells MAT £5,776 19.0 -Edwards and Ward Ltd - Chew Stoke Primary Academy £437 29.9 -Edwards and Ward Ltd - Henleaze Academy £1,110 21.0 -Edwards and Ward Ltd (Paulton Infant School) £1,432 20.9 -





amount

Edwards and Ward Ltd (Pensford Primary School) £356 23.0 -Edwards and Ward Ltd - St Keyna Primary School £778 19.9 -Edwards and Ward Ltd - St Mark's CofE Secondary School £452 22.7 -Edwards and Ward Ltd - Twerton Infant School & Nursery £29 15.0 -Fit for Sport - St Peter's C of E Primary School £631 21.0 -Future Cleaning Services Limited - Ashton Park School £1,169 20.4 -Future Stars Club Limited £371 20.0 -Glen Cleaning Company Limited £6,951 24.0 -Greenwich Leisure Ltd - Bath & North East Somerset Council £23,585 16.9 £1,600Greenwich Leisure Ltd - North Somerset Council £868 19.5 -Lex Leisure C.I.C. £1,820 22.8 -Liberata UK Ltd £43,074 20.7 (£48,300)Mentoring Plus Bath & North East Somerset £2,045 23.3 -Notaro Homecare Limited £3,227 21.7 -Prestige Cleaning & Maintenance Limited £2,203 24.6 -Relyon Cleaning Services - Cotham Gardens Primary School £305 30.8 -Ridge Crest Cleaning Ltd - Bristol City Council £2,592 22.6 -Ridge Crest Cleaning Ltd - Sir Bernard Lovell School £1,829 23.3 -Shaw Healthcare - The Granary £917 23.3 £9,300SITA Holdings UK Ltd £1,325 29.9 £71,400Skanska Rashleigh Weatherfoil Ltd £2,962 19.4 (£300)SLM Community Leisure Trust £64,220 18.6 £18,300SLM Fitness & Health Ltd £8,702 17.4 £8,700Sodexo Ltd £826 22.9 £2,900Taylor Shaw Limited £2,959 21.5 -The Brandon Trust £9,350 22.0 -Virgin Care Services Limited £190,674 21.0 -


Statement of Accounts 2018/19

Fund Account For the Year Ended 31 March 2019

Notes 2018/19 2017/18Dealings with members, employers and others directly involved in the fund

£’000 £’000

Contributions Receivable 4 (153,929) (224,764)Transfers In (9,035) (8,613)

(162,964) (233,377)Benefits Payable 5 171,863 163,014Payments to and on account of Leavers 6 9,722 7,939

181,585 170,953

Net (additions) / withdrawals from dealings with members 18,621 (62,424)Management Expenses 7 22,858 26,374Net (additions) / withdrawals including fund management expenses

41,479 (36,050)

Returns on InvestmentsInvestment Income 8 (37,012) (28,008)Profits and losses on disposal of investments and change in value of investments. 9 (221,369) (183,089)

Net Returns on Investments (258,381) (211,097)Net Increase in the net assets available for benefits during the year (216,902) (247,147)

Net Assets of the Fund Opening Net Assets of the Fund At 1 April 4,600,925 4,353,778Closing Net Assets of the Fund At 31 March 4,817,827 4,600,925


Net Assets Statement at 31 March 2019

Notes 31 March 2019

31 March 2018

Investment Assets £’000 % £’000 %Equities 554,790 11.5 1,075,449 23.4Bonds 0.0 - 0.0 -Pooled investment vehicles 428,751 8.9 410,899 8.9Non Property Pooled Investment Vehicles 3,718,768 77.1 2,907,105 63.2Cash deposits 105,377 2.2 204,037 4.4Other Investment balances 3,486 0.1 5,096 0.1Derivative contracts (Foreign Exchange hedge) 7,984 0.2 13,840 0.3Derivative Contracts: FTSE Futures 349 - -Long-Term Investments 395 - 840 0.0Investment LiabilitiesDerivative Contracts: FTSE Futures (598) (0.0)Other Investment balances (147) - (8,361) ( 0.2)Total Investment Assets 10 4,819,753 4,608,307Long Term Debtors 12a 70 -

Net Current AssetsCurrent Assets 12 13,079 0.3 11,961 0.3Current Liabilities 12 (15,075) (0.3) (19,343) (0.4)Net assets of the scheme available to fund benefits at the period end 4,817,827 100 4,600,925 100

Analysis of Non Property Pooled Investment Vehicles

Diversified Growth Funds 597,717 602,103Infrastructure 342,723 283,594Liability Driven Investments 580,817 521,212Multi Asset Credit 410,444 482,296Derivative Contract: OTC Equity index Options (12,585) 15,010Hedge Funds 232,127 210,133Secured Income 16,695 0Equity 1,464,662 710,633Bonds 86,168 82,124

3,718,768 2,907,105

The Fund’s financial statements do not take account of liabilities to pay pensions and other benefits after 31 March 2019. The actuarial present value of these liabilities is disclosed in note 15.


1. INTRODUCTION & STATEMENT OF ACCOUNTING POLICIES

Description of Fund

1.1 The Fund is administered by Bath & North East Somerset Council under arrangements made following the abolition of the former Avon County Council on 31 March 1996.

The scheme is governed by the Public Service Pensions Act 2013. The fund is administered in accordance with the following secondary legislation:– The Local Government Pension Scheme Regulations 2013 (as amended)– The Local Government Pension Scheme (amendedment) Regulations 2018– The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 (as amended)– The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016

Membership of the Fund is open to pensionable employees of scheduled bodies in the former Avon County area, together with employees of eligible designating and admission bodies. A list of employers with contributing scheme members can be found in note 25.

Employers’ contributions are payable at the rate specified for each employing authority by the Fund’s actuary. The employees’ contribution rate is payable in accordance with the Local Government Pension Scheme Regulations 2013 as amended.

Introduction to the Statement of Accounts

1.2 This statement comprises the Statement of Accounts for the Avon Pension Fund (the Fund). The accounts cover the financial year from 1 April 2018 to 31 March 2019.

1.3 These accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting (‘Code of Practice’) in the United Kingdom 2018/19 based on International Financial Reporting Standards as published by the Chartered Institute of Public Finance and Accountancy. The accounts have been prepared on an accruals basis, except for certain transfer values as described at ‘Statement of Accounting Policies’ – item 1.21. They do not take account of liabilities to pay pensions and other benefits in the future.

Actuarial Valuation

1.4 As required by the Local Government Pension Scheme Regulations 2013 an actuarial valuation of the Fund was carried out as at 31 March 2016. The market value of the Fund’s assets at the valuation date was £3,737m. The Actuary estimated that the value of the Fund was sufficient to meet 86% of its expected future liabilities of £4,355m in respect of service completed to 31 March 2016.

1.5 At the 2016 valuation the average deficit recovery period for the Fund overall was set at 16 years.

1.6 The 2016 actuarial valuation was carried out using the projected unit actuarial method. The main assumptions used to set employers’ contributions, are set out in the table below:

1.7 The 2016 triennial valuation was completed during 2016/17 using market prices and membership data as at 31 March 2016. The 2016 valuation set the employer contribution rates for future service and deficit recovery payments (expressed as a monetary amount payable annually) with effect from 1 April 2017. Historically the discount rate used has been based on gilt yields. However, having taken advice from the Scheme Actuary, the discount rate used in the 2016 valuation is based on CPI plus a real investment return of 2.2% p.a. which better reflects the expected return of the investment portfolio in the long term compared to the gilts basis.

1.8 The Actuary has estimated that the funding level has remained stable over the year at 96% based on the 2016 valuation financial assumptions. 1.9 The potential effect of the McCloud judgement is included in the IAS26 disclosure. The Actuary has calculated the impact to be an additional liability of £40 million. Once the remediation for the Local Government Pension Scheme is known, employer contributions will be adjusted in line with guidance from the Scheme Advisory Board.

1.10 Note 15 to the accounts shows the actuarial present value of promised retirement benefits for the purposes of IAS26 using the assumptions and methodology of IAS 19. The discount rate referenced for IAS19 is the Corporate Bond yield. The discount rate used for the Actuarial Valuation references the Fund’s investment strategy.

1.11 The Fund’s Funding Strategy Statement can be found on the Fund’s website www.

Past service liabilities Future service liabilitiesRate of Discount 4.4% per annum 4.95% per annumRate of pensionable pay inflation 3.7% per annum 3.7% per annumRate of price inflation 2.2% per annum 2.2% per annum

Notes to the Accounts - Year Ended 31 March 2019


avonpensionfund.org.uk (search Funding Strategy Statement) and is summarised within the Fund’s Annual Report. The purpose of the Funding Strategy Statement is to set out a clear and transparent funding strategy that will identify how each employer’s pension liabilities are to be met going forward.

Investment Strategy Statement

1.12 The Fund’s Investment Strategy Statement (ISS) as required by the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 can be found on the Fund’s website www.avonpensionfund.org.uk (search Investment Strategy Statement) and is summarised within the Fund’s Annual Report. The ISS was last updated in December 2018.

1.13 The Fund’s assets are currently managed externally by investment managers appointed and monitored by the Fund. The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 require funds to pool their investments assets from 1 April 2018. As a consequence the Fund is a member of Brunel Pension Partnership, a pool of 10 LGPS funds, which has established an FCA regulated company, Brunel Pension Partnership Limited (Brunel), to manage the assets of the pool. Each fund in the pool is a shareholder owning an equal share of the company. The Fund’s assets are gradually transitioning to Brunel (transition commenced in July 2018). Once the assets have transferred, Brunel will be responsible for appointing and monitoring managers and other investment related operational aspects of the Fund. The Investment Strategy Statement will be updated during this transition to reflect the changing responsibilities.

1.14 Fund has implemented two investment strategies to manage specific risks within the asset portfolio. These strategies are held within a Qualified Investment Fund (QIF) managed by Blackrock.

i. A Liability Driven Investment strategy has been implemented

to provide a hedge against changes in the value of the pension liabilities within the asset portfolio. This strategy consists of bonds (specifically Index link gilts) and derivatives such as gilt repurchase agreements and interest and inflation swaps, structured to achieve the desired hedge profile.

ii. Additionally within the QIF is a strategy to lock in the gains in equity markets ahead of the 2019 actuarial valuation. Using Over The Counter (OTC) equity index option contracts this strategy protects the Fund’s developed markets equity assets from a fall in global markets into 2020.

Statement of Accounting Policies

Basis of Preparation

1.15 Except where otherwise stated, the accounts have been prepared on an accruals basis, i.e. income and expenditure is recognised as it is earned or incurred, not as it is received or paid. The accounts have been prepared on a going concern basis.

Investments 1.16 Investments are shown in the accounts at market value, which has been determined as follows:

i. Quoted Securities have been valued at 31 March 2019 by the Fund’s custodian using internationally recognised pricing sources (bid-price or ‘last trade’) where a quotation was available on a recognised stock exchange or the unlisted securities market. Some UK property funds have been valued at mid price as opposed to bid price with unaudited valuations used as the latest available for the accounting date. Unquoted securities are included at fair value based on the Fund Manager’s valuation. All these valuations are subject to the custodian’s and fund manager’s internal control reports and their external auditors.

ii. Fixed interest securities exclude interest earned but not paid over at the year end, which

is included separately within investment debtors.

iii. Pooled investments are stated at their bid price or at the Net Asset Value quoted by their respective managers at 31 March 2019. The basis of valuation is explained further in note 24.

iv. Foreign currency transactions are recorded at the prevailing rate at the date of transaction. Investments held in foreign currencies are shown at market value translated into sterling at the exchange rates ruling as at 31 March 2019.

v. Open futures contracts are included in the Net Asset Statement at their fair market value, which is the unrealised profit or loss at the current bid or offer market quoted price of the contract. The amounts included in the change in market value are the realised gains or losses on closed futures contracts and the unrealised gains or losses on open futures contracts.

vi. Over the Counter (OTC) Equity Index options are included in the Net Asset Statement at their fair market value, which is the unrealised profit or loss at the current value of the contract. The amounts included in the change in market value are the realised gains or losses on closed futures contracts and the unrealised gains or losses on open futures contracts

vii. Overseas properties are valued as at 31 December 2018 with adjustments made for any reduction or addition to the level of investment.

viii. Forward foreign exchange contracts outstanding at the year- end are stated at fair value which is determined as the gain or loss that would arise if the outstanding contract was matched at the year end with an equal and opposite contract. Foreign currency transactions are recorded at the prevailing rate at the date of transaction.

ix. The only Long Term Investment is shares in Brunel Pension Partnership Ltd. Its fair value is based on the value of equity in Brunel Pension Partnership Ltd accounts.

x. Acquisition costs of investments (e.g. stamp duty and commissions) are treated as part


of the investment cost.xi. Investment debtors and creditors

at the year- end are included in investment assets in accordance with the CIPFA code of practice on local authority accounting.

xii. The Fund’s surplus cash is managed separately from the surplus cash of Bath and North East Somerset Council (B&NES) and is treated as an investment asset.

Contributions 1.17 Contributions represent those amounts receivable from the employing bodies in respect of their own and their pensionable employees’ contributions. Employers’ contributions are determined by the Actuary on the basis of triennial valuations of the Fund’s assets and liabilities and take into account the Funding Strategy Statement set by the administering authority. The last such valuation was at 31 March 2016. Currently employer contribution rates range from 7.0% to 30.8%. Employees’ contributions have been included at the rates prescribed by the Local Government Pension Scheme Regulations 2013 (as amended). The employee contribution rates range from 5.5% to 12.5% of pensionable pay for the financial year ending 31 March 2019.

1.18 Normal contributions both from members and the employer are accounted for on an accruals basis in the payroll period to which they relate. Employer deficit funding contributions are accounted for on the due dates on which they are payable under the schedule of contributions set by the scheme actuary or on receipt if earlier than the due date.

Benefits, Refunds of Contributions and Cash Transfer Values 1.19 From 1 April 2014, the scheme became a career average scheme, whereby members accrue benefits based on their pensionable pay in that year at an accrual rate of 1/49th. Accrued pension is up-rated annually in line with the Consumer Prices Index.

1.20 Benefits payable and

refunds of contributions have been brought into the accounts as they fall due.

1.21 Cash Transfer Values are those sums paid to or received from other pension schemes and relate to previous periods of pensionable employment. Cash Transfer Values have been included in the accounts on the basis of the cheque payment date or “Bath & North East Somerset Council cash office received” date. Accruals are only made when it is certain that a transfer is to take place.

1.22 Charges for splitting pensions on divorce are either invoiced to members or, on request, paid out of future benefits. In the case of payment from future benefits the charge against benefits and income to the Fund are both made in the current year. The charges are index linked to pension’s increases to ensure that the Fund receives the full value.

Investment Income 1.23 Dividends and interest have been accounted for on an accruals basis, based on figures provided by the custodian. Some of the income on pooled investments is accumulated and reflected in the valuation of the units. Some of the income on pooled investments (mainly property) is distributed.

Investment Management & Administration 1.24 The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 permit Bath & North East Somerset Council to charge administration costs to the Fund. A proportion of relevant Council costs has been charged to the Fund on the basis of time spent on Pension Fund business.

1.25 The fees of the Fund’s external investment managers reflect their differing mandates. Fees are linked to the market value of the Fund’s investments and therefore may increase or reduce as the value of the investment changes. Management fees are recognised in the year in which the management services are provided. A provision

has been made for performance fees that have been incurred but are subject to phased payments or are not to be paid until the realisation of the related investments. These remain subject to change as a consequence of future performance. Fees are also payable to the Fund’s global custodian and other advisors.

Taxation

1.26 The Fund is an exempt approved fund under the Income and Corporation Taxes Act 1988 and is therefore not liable to UK income tax on investment income or to capital gains tax. As Bath & North East Somerset Council is the administering authority for the Fund, VAT input tax is recoverable on all Fund activities including expenditure on investment expenses. For taxation of overseas investment income please see note 3iv in the Notes to the Accounts.

Assumptions made about the future and other major sources of estimation uncertainty 1.27 The Statement of Accounts contains estimated figures that are based on assumptions made about the future or that are otherwise uncertain. Estimates are made taking in to account historical experience, current trends and other relevant factors. However because balances cannot be determined with certainty actual results could be materially different from the assumptions and estimates. Estimates are used in the valuation of unquoted investments and in the actuarial valuation for the purposes of IAS 26 (note 15) in which the actuarial calculation of the liability is subject to the professional judgement of the Scheme Actuary. The Fund’s investments are stated at fair value. The subjectivity of the inputs used in making an assessment of fair value is explained in note 24.

Events After the Balance Sheet Date

1.28 The Statement of Accounts is adjusted to reflect events that occur after the end of the reporting period that provide evidence of conditions that existed at the end


of the reporting period, should they occur. The Statement of Accounts is not adjusted to reflect events that are indicative of conditions that arose after the reporting period, but where material, disclosure is made in the notes of the nature and estimated financial effect of such events.

Financial Instruments

1.29 Financial Assets and Liabilities are recognised on the Balance Sheet when the Fund becomes a party to the contractual provisions of a financial instrument and are measured at fair value or amortised cost. Critical Judgements in Applying Accounting Policies

1.30 The net pension fund liability is recalculated every three years by the appointed actuary. The methodology used is in line with accepted guidelines.

This estimate is subject to significant variances based on changes to the underlying assumptions which are agreed with the actuary and have been summarised in Note 1.6 above.

These actuarial revaluations are used to set future contribution rates and underpin the fund’s most significant investment management policies, for example in terms of the balance struck between longer term investment growth and short-term yield/return.

Following consultation the judgement has been made that the Fund does not have significant influence over the Brunel Pensions Partnership and consequently it is not considered to be a joint venture.Each fund holds an equal 10% stake in the pension fund, so no pension fund exerts more influence than another. Also, a holding of 20% or more of the voting power is generally required to indicate significant influence.

Item Uncertainties Effect if actual results differ from assumptions

Market Value of investments

The Fund’s investments are revalued on a monthly basis. Investments are valued using quoted prices in active markets or by reference to markets which are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs with the exception of the Hedge Funds (£232.127 millions), Pooled Property Investments (£201.187 millions), Infrastructure (£342.723 millions) and Secure Income (£16.695 millions)

For every 1% increase in Market Value the value of the Fund will increase by £48.198 millions with a decrease having the opposite effect.

Actuarial present value of promised retirement benefits (Note 15)

Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. Mercer, a firm of consulting actuaries, is engaged to provide the authority with expert advice about the assumptions to be applied.

The effects on the actuarial present value of promised retirement benefits (the Fund’s liabilities) of changes in individual assumptions can be measured. For instance, based on the 2016 actuarial valuation results:• a 1% per annum reduction in the

discount rate assumption would result in an increase in the Fund’s liabilities of approximately 19%.

• a 0.25% per annum increase in the assumed earnings inflation would result in an increase in the Fund’s liabilities of approximately 1%.

• a one-year increase in assumed life expectancy would result in an increase in the Fund’s liabilities of approximately 2%.


2. MEMBERSHIP

Membership of the Fund at the year-end was as follows:-

31 March 2019 31 March 2018Employed Members 36,894 36,479Pensioners 32,137 30,734Members entitled to Deferred Benefits 42,114 43,012Total 111,145 110,225

A further estimated 738 (847 in 2017/18) ex-members whose membership was for up to 2 years before 1 April 2014 or up to 3 months after that date are due refunds of contributions. It is not possible to put an exact value on this liability until these ex-members have been traced and their entitlement verified.

3. TAXATION

i. Value Added TaxThe Fund’s administering authority Bath & North East Somerset Council is reimbursed VAT by HM Revenue and Customs and the accounts are shown exclusive of VAT.

ii. Income Tax The Fund is a wholly exempt fund and some UK income tax is recoverable from HM Revenue and Customs. Where tax can be reclaimed, investment income in the accounts is shown gross of UK tax.

iii. Capital Gains TaxNo capital gains tax is chargeable.

iv. Taxation of Overseas Investment Income The Fund receives interest on its overseas government bond portfolio gross, but a variety of arrangements apply to the taxation of interest on corporate bonds and dividends on overseas equities.

4. CONTRIBUTIONS RECEIVABLE

Contributions receivable are analysed below:-

2018/19 2017/18Employers’ normal contributions £’000 £’000Scheduled Bodies 78,070 71,831Administering Authority 8,569 8,768Admission Bodies 7,832 94,471 8,097 88,696

Employers’ deficit FundingScheduled Bodies 14,593 76,439Administering Authority (180) 14,837Admission Bodies 637 15,050 2,912 94,188Total Employer’s normal & deficit funding 109,521 182,884

Employers’ contributions- AugmentationScheduled Bodies 1,950 3,089Administering Authority 2,230 278Admission Bodies 308 4,488 107 3,474


Members’ normal contributions Scheduled Bodies 32,892 30,998Administering Authority 3,754 3,947Admission Bodies 2,720 39,366 2,856 37,801

Members’ contributions towards additional benefits Scheduled Bodies 429 484Administering Authority 82 92Admission Bodies 43 554 29 605Total 153,929 224,764

Deficit funding contributions have been paid by employers in respect of the recovery of their deficit relating to past service. In 2017/18 the deficit funding contributions included £82,254k of discounted contributions that the actuary had calculated to cover the required deficit contributions for the three years commencing 2017/18. In 2018/19 Unitary councils received £1,109k in deficit rebates relating to payments for Academies who transferred in 2018/19 (£180k of which related to the Administering Authority).

The Members’ contributions towards additional benefits above represent members’ purchase of added years or additional benefits under the Scheme. Augmentation contributions are paid by employers to meet the cost of early retirements.

A further facility is provided whereby members can make Additional Voluntary Contributions, on a money purchase basis, which are invested in insurance policies with The Equitable Life Assurance Society or Aviva on behalf of the individual members concerned. These contributions are not part of the Pension Fund and are not therefore reflected in the Fund’s accounts. A statement of the value of these investments is given in note 18.

5. BENEFITS PAYABLE

Analysis of Benefits Payable by Type:-

2018/19 2017/18£’000 £’000

Retirement Pensions 142,405 135,003Commutation of pensions and Lump Sum Retirement Benefits 25,802 24,655Lump Sum Death Benefits 3,656 3,356

171,863 163,014

Analysis of Benefits Payable by Employing Body:-

2018/19 2017/18£’000 £’000

Scheduled & Designating Bodies 140,228 134,704Administering Authority 18,312 15,942Admission Bodies 13,323 12,368

171,863 163,014


6. PAYMENTS TO AND ON ACCOUNT OF LEAVERS

2018/19 2017/18Leavers £’000 £’000Refunds to members leaving service 866 744Individual Cash Transfer Values to other schemes 8,856 7,195Group Transfers - -

9,722 7,939

7. MANAGEMENT EXPENSES

Costs incurred in the management and administration of the Fund are set out below.

2018/19 2017/18£’000 £’000

Administrative Costs 2,177 1,829Investment Management Expenses 19,304 23,109Oversight & Governance Costs 1,377 1,436

22,858 26,374

Further Analysis of Management Expenses:-

2018/19 2017/18Administrative Costs £’000 £’000Management costs 1,450 1,215Administration and Processing 420 565Service from Administrating Body 497 473Fees and Income (190) (424)

2,177 1,829

Investment Management ExpensesFund Manager Base Fees 20,470* 13,449Fund Manager Performance Fees (3,330) 3,681Investment Transaction Costs 1,916 5,896Global custody 248 83

19,304 23,109

Oversight & Governance CostsManagement costs 535 527Specialist advice and Governance 1,068 1,182Actuarial recharges (266) (311)Audit fees 40 38

1,377 1,43622,858 26,374

* Fund manager base fees were originally understated due to transaction costs being deducted from them. Fund Manager Base fees were actually £19.345m. Consequently management expenses would have been £32.270m. The Accounts have not been restated as this is deemed not material as per IAS 8.

In 2017/18 fees and income included £0.236m rebate of Brunel Pensions Partnership development costs that are


included in the Fund Manager base fees for that year.

Fund Manager Performance Fees include fees that have been accrued but are subject to phased payment or not due to be paid until the realisation of the related assets. Unpaid fees remain subject to variation as a result of future performance. Total fund manager fees include management charges for pooled investments that are settled directly within the pooled vehicles in accordance with the investment management agreement.

The provision for performance fees relate mainly to pooled funds and they are estimated from the information available. Fund manager performance fees for 18/19 represent a reduction in provision of £3.330m. This relates to management fees which had not previously been recognised as paid (2.958m) and reduction in provision (£0.372m).

The management fees include fees that should have been paid before a fee holiday (£0.069m). The fee holiday has been included within transaction costs. Also included within management fees is £0.998m paid to Brunel Pension Partnership for core investment services.

Investment transaction costs do not include the underlying transaction costs within pooled funds. Transaction costs include the costs of transitioning assets to the portfolios managed by Brunel.

Management costs in Oversight & Governance Costs include investments, actuarial and accounting staff costs. Audit fees include; £0.022m external audit fee as set out in the Audit Plan (2017/18 £0.029m), £0.008m internal audit charge (2017/18 £0.008m) and £0.001m additional external fee relating to information provided to the actuary regarding individual employers’ IAS19 disclosures (2017/18 £0.001m).

8. INVESTMENT INCOME

2018/19 2017/18£’000 £’000

Dividends from equities 18,954 20,772Income from Index Linked securities - -Income from pooled investment vehicles 13,017 6,583Income from other pooled investment vehicles 3,977 312Interest on cash deposits 912 272Other - Stock lending 152 69

37,012 28,008

The Fund has an arrangement with its custodian (State Street Trust and Bank) to lend eligible securities from its portfolio to third parties in return for which the third parties pay fees to the fund. The third parties provide collateral to the Fund which is held during the period of the loan. The Fund may terminate any loan of securities by giving notice of not less than the standard settlement time for those securities.

The value of the stock on loan as at 31 March 2019 was £15.6m (31 March 2018 £29.9m), comprising of equities and sovereign debt. This was secured by collateral worth £16.9m comprising equities and sovereign debt. The Fund does not sell collateral unless there is a default by the owner of the collateral.


9. CHANGE IN TOTAL NET ASSETS

Change in Market Value of Investments

Value at 31/03/18

Purchases at Cost

Sales Proceeds

Change in Market Value

Value at 31/03/19

£’000 £’000 £’000 £’000 £’000Equities 1,075,449 321,072 (855,828) 14,097 554,790Long Term Investments 840 (445) 395Bonds - -Pooled Investments -- Property 410,899 202,717 (196,868) 12,004 428,752- Non Property 2,907,105 1,914,192 (1,330,941) 228,411 3,718,767Derivatives 13,243 89,542 (42,438) (52,014) 8,333Sub Total 4,407,536 2,527,523 (2,426,075) 202,053 4,711,037Cash Deposits 204,037 295,606 (387,589) (6,677) 105,377Net Purchases & Sales 2,823,129 (2,813,664) 9,465Investment Debtors & Creditors (3,266) 6,605 3,339Total Investment Assets 4,608,307 4,819,753Long Term Debtors 70 70Current Assets (7,382) 5,386 (1,996)Less Net Revenue of Fund 4,467Total Net Assets 4,600,925 221,369 4,817,827

The Change in Market Value of investments comprises all gains and losses on Fund investments during the year, whether realised or unrealised.

The Change in Market Value for cash deposits represents net gains on foreign currency deposits and foreign exchange transactions during the year.

Derivatives. The purchases and sales of derivatives are shown at the values of the realised profits and losses of the net derivatives transactions.

Liability Driven Investments and Equity Options. Elsewhere in the Statement of Accounts Liability Driven Investments and Equity Options have been shown separately for greater transparency. In the above table they are treated as all other pooled investment vehicles. They are both included as Non Property Pooled Investments.

The Net Revenue of Fund figure in the above table includes the investment transaction costs as specified below. These are the costs that it has been possible to identify. Additional costs will have been absorbed within pooled investments. The Net Revenue of Fund equals the Net Withdrawals / additions from dealings with members (-£39,493k) plus Investment income (£37,012k) as shown in the Fund account.


Change in Total Net Assets 2017/18Change in Market Value of Investments

Value at 31/03/17

Purchases at Cost

Sales Proceeds

Change in Market Value

Value at 31/03/18

£’000 £’000 £’000 £’000 £’000Equities 750,053 2,090,656 (1,768,355) 3,095 1,075,449Long Term Investments 840 840Bonds 509,172 5,745 (491,453) (23,464) -Pooled Investments -- Property 380,909 101,446 (94,623) 23,167 410,899- Non Property 2,639,401 2,383,505 (2,208,506) 92,705 2,907,105Derivatives 5,023 45,790 (106,068) 68,498 13,243Sub Total 4,284,558 4,627,982 (4,669,005) 164,001 4,407,536Cash Deposits 67,712 601,694 (506,869) 41,500 204,037Net Purchases & Sales 5,229,676 (5,175,874) 53,802Investment Debtors & Creditors 5,505 (8,771) (3,266)Total Investment Assets 4,357,775 4,608,307Current Assets (3,997) (3,385) (7,382)Less Net Revenue of Fund (64,058)Total Net Assets 4,353,778 183,089 4,600,925

The Net Revenue of Fund figures in the above tables include the investment transaction costs as specified below. These are the costs that it has been possible to identify. Additional costs will have been absorbed within pooled investments.

Investment Transaction Costs.

2018/19 2017/18£’000 £’000

Fees & Taxes 1,315 2,711Commission 601 3,185Total 1,916 5,896

Investment transaction costs for 18/19 include the costs of transitioning assets to the portfolios managed by Brunel.


10. INVESTMENT ASSETS

Further analysis of the market value of investments as set out in the Net Assets Statement is given below:-

31 March 2019 31 March 2018UK Equities £’000 £’000Quoted 190,348 342,303Pooled Investments 194,418 30,188FTSE Futures 349 385,115 (598) 371,893

Overseas EquitiesQuoted 364,442 733,146Pooled Investments 1,270,243 680,444Equity Index Options (12,585) 1,622,100 15,010 1,428,600

UK BondsQuoted - - - -

Sterling Bonds (excluding Gilts)UK Pooled Investments 86,168 86,168 82,124 82,124

Diversified Growth FundsOverseas Pooled Investments 597,717 597,717 602,104 602,104

InfrastructureOverseas Pooled Investments 342,723 342,723 283,594 283,594

Liability Driven InvestmentUK Pooled Investments 580,817 580,817 521,212 521,212

Multi Asset CreditOverseas Pooled Investments 410,444 410,444 482,296 482,296

Hedge FundsOverseas Pooled Investments 232,127 232,127 210,133 210,133

PropertyUK Pooled Investments 227,565 209,579Overseas Pooled Investments 201,187 428,752 201,320 410,899

Secured Income UK Pooled Investments 16,695 16,695 - -

Long Term InvestmentsBrunel Share Capital 395 395 840 840

Cash Deposits Sterling 68,871 185,001Foreign Currencies 36,506 105,377 19,036 204,037


Investment Debtors/CreditorsInvestment Income 3,486 5,096Sales of Investments 227,692Foreign Exchange Hedge 7,984 13,840Purchases of Investments (147) 11,323 (236,053) 10,575Total Investment Assets 4,819,753 4,608,307

The Overseas Pooled Investments above are global mandates. Although they are predominantly Overseas assets they may include some UK assets.

The Liability Driven Investments pooled vehicle is structured to provide a hedge against changes in the value of the pension liabilities. The structure invests in Index linked gilts and derivatives to provide the desired hedge against the liabilities. At 31 March 2019 the net value of these assets was £580,817m.

OTC Equity Index Options are used to protect the developed equity assets from a fall in equity markets. At 31 March 2019 the unrealised loss on this strategy was £12.5m.

Both strategies are held within the same pooled vehicle, a Qualified Investment Fund (QIF) managed by Blackrock on a bespoke basis for the Fund; the QIF had a value of £1,008m at March 2019.

Derivatives AnalysisOpen forward currency contracts

Settlement Currency bought

Local Value Currency Sold

Local Value Asset Value Liability Value

£000’s £000’s 000’s £000’s £000’sUp to one month EUR 63,205 GBP 54,551 - (35)Up to one month JPY 1,247,800 GBP 8,643 17 -Up to one month USD 184,638 GBP 141,735 - (238)Up to one month GBP 8,500 JPY 1,247,800 - (160)Up to one month GBP 56,532 EUR 63,205 2,017 -Up to one month GBP 139,871 USD 184,638 - (1,626)One to six months EUR 9,787 GBP 8,604 - (145)One to six months JPY 152,900 GBP 1,059 4 -One to six months USD 19,639 GBP 15,238 - (234)One to six months GBP 270,591 EUR 304,752 6,901 -One to six months GBP 40,397 JPY 5,793,900 87 -One to six months GBP 687,376 USD 899,199 1,285 -Six to twelve months GBP 51,172 EUR 58,993 - (42)Six to twelve months GBP 7,865 JPY 1,128,200 - (8)Six to twelve months GBP 133,800 USD 175,912 161 -Total 10,472 (2,488)

Net forward currency contracts at 31 March 2019 7,984

Open forward currency contracts at 31 March 2018 15,267 (1,427) Net forward currency contracts at 31 March 2018 13,840


Equity Options

Original Notional (GBP) Notional at 31 March Gain/(Loss) at 31 March£’000 £’000 £’000

S&P 500 Index Options 790,885 873,023 (34,706)Nikkei 225 Index Options 157,262 153,871 4,991FTSE 100 Index Options 395,692 389,626 7,750EuroStoxx50 Index Options 236,732 215,081 8,735Total 1,580,571 1,631,601 (13,230)Equity Options at 31 March 2018 - 15,011

* BlackRock carry a small amount of cash in this fund for immediate collateral requirements which is added to the total value. For March 2019 the cash balance was £643,752.00.

Exchange Traded Derivatives held at 31 March 2019:-

Contract Type Expiration Book Cost Unrealised Gain£’000 £’000

FTSE equity futures June 2018 21,297 350

Exchange Traded Derivatives held at 31 March 2018:-

FTSE equity futures June 2018 73,279 (598)

A derivative is a financial contract between two parties, the value of which is determined by the underlying asset. Investment in derivatives may only be made if they contribute to a reduction of risks and facilitate efficient portfolio management.

The UK Equity futures contracts are held to facilitate efficient portfolio management for a passively managed investment where the costs of investing directly in UK equities would be significant.

Forward “over the counter” foreign exchange contracts are held to reduce the impact of fluctuations in the exchange rate between sterling and the other currency.OTC Equity Index Options are used to protect the developed equity assets from a fall in equity markets.


Investment Assets by Manager

The proportion of the market value of investment assets managed by each external manager and in house Treasury Management at the end of the financial year was:

31 March 2019 31 March 2018Investments managed by Brunel Pension Partnership: £’000 % £’000 % LGIM Low Carbon Global Equities 520,926 10.8 - - Brunel Infrastructure Portfolio 11,152 0.2 - - Brunel Secured Income Portfolio 16,695 0.3 - - Brunel UK Equity Portfolio 187,270 3.9 - -

736,043 15.3 - - Investments managed outside Brunel Pension Partnership:Blackrock 1,166,378 24.2 1,471,348 31.9 Standard Life - - 240,709 5.2 Record 29,631 0.6 86,436 1.9 Jupiter Asset Management 205,588 4.3 196,870 4.3 Genesis Investment Management 117,600 2.4 113,788 2.5 Partners Group 228,326 4.7 218,347 4.7 Loomis (Natixis) 410,444 8.5 482,296 10.5 Pyrford International 218,582 4.5 135,269 2.9 TT International 305 0.0 184,557 4.0 Signet Capital Management - 1,633 0.0 IFM Investors 331,571 6.9 283,594 6.2 Ruffer 379,136 7.9 226,126 4.9 Unigestion (UK) Ltd 110,931 2.3 107,920 2.3 Schroder Investment Management 630,378 13.1 578,585 12.6 JP Morgan 232,127 4.8 210,133 4.6 General Cash 14,409 0.3 61,427 1.3 Long Term Investment 395 0.0 840 0.0Treasury Management 7,909 0.2 8,429 0.2

4,083,710 84.7 4,608,307 100.0 Total Investment Assets 4,819,753 100.0 4,608,307 100.0

During 2018/19, the assets managed by TT International (UK Equities) and Blackrock (passively managed Global Low Carbon Equities) transitioned to the Brunel asset pool. Further transitions are expected later in 2019/20 for the Emerging Market and Global Equities mandates. In addition, new allocations to Renewable Infrastructure and Secured Income were invested via Brunel portfolios.


11. SINGLE INVESTMENTS OVER 5% OF THE FUND

The following investments represent more than 5% of the net assets of the fund.

Investments Value at 31st March 2019

Net Assets

Value at 31st March 2018

Net Assets

£’000 % £’000 % Blackrock Liability SOL Mutual Fund 1,008,422 20.93% 536,222 11.63%LGIM Low Carbon Global Equity 520,926 10.81% 0 -NATIXIS Investment Solutions 410,444 8.52% 482,296 10.46%CF Ruffer Absolute Return Fund 379,136 7.87% 226,126 4.91%IFM Global Infrastructure (UK) 331,571 6.88% 283,594 6.15%Blackrock ACS World Low Carbon Equity - 0.00% 458,736 9.95%Standard Life Global Absolute - 0.00% 240,709 5.22%

12. CURRENT ASSETS AND CURRENT LIABILITIES

Provision has been made in the accounts for debtors and creditors known to be outstanding at 31 March 2019. Debtors and creditors included in the accounts are analysed below:-

31 March 2019 31 March 2018Current Assets £’000 £’000Contributions Receivable :- - Employers 7,981 6,801 - Members 3,128 2,717 Transfer Values Receivable - - Discretionary Early Retirement Costs 129 936 Other Debtors 1,841 13,079 1,507 11,961

Current LiabilitiesManagement Fees (1,647) (2,339)Provision for Performance Fees (10,918) (14,248)Transfer Values Payable - - Lump Sum Retirement Benefits (1,203) (1,073)Other Creditors (1,307) (15,075) (1,683) (19,343)Net Current Assets (1,996) (7,382)

The provision for Performance Fees includes fees that have been incurred but are subject to phased payment or not due to be paid until the realisation of the related assets. They remain subject to variation as a result of future performance.


12A. LONG TERM DEBTERS

Provision has been made in the accounts for long term debtors known to be outstanding at 31 March 2019.

31 March 2019 31 March 2018£’000 £’000

Reimbursement of lifetime tax allowances 70 -

The Lifetime tax allowance was introduced in 2016. It limits the amount of pension that can be paid without an extra charge. Responsibility for payment rests with the pensioner. Avon Pension Fund offer to pay the tax upfront and are reimbursed from pension deductions over time. This creates a long term debtor in the accounts.

13. CONTINGENT LIABILITIES

There were no contingent liabilities as at 31 March 2019. (31 March 2018 = NIL).

14. EVENTS AFTER THE BALANCE SHEET DATE

There have been no events after 31 March 2019 that require any adjustment to these accounts.

15. ACTUARIAL PRESENT VALUE OF PROMISED RETIREMENT BENEFITS FOR THE PURPOSES OF IAS 26

IAS 26 requires the present value of the Fund’s promised retirement benefits to be disclosed, and for this purpose the actuarial assumptions and methodology used should be based on IAS 19 rather than the assumptions and methodology used for funding purposes.

To assess the value of the benefits on this basis, we have used the following financial assumptions as at 31 March 2019 (the 31 March 2018 assumptions are included for comparison):

31 March 2019 31 March 2018Rate of return on investments (discount rate) 2.4% per annum 2.6% per annumRate of pay increases* 3.7% per annum 3.6% per annumRate of increases in pensions in payment (in excess of Guaranteed Minimum Pension)/Deferred revaluation 2.3% per annum 2.2% per annum

Rate of CPI Inflation / CARE Benefit revaluation 2.2% per annum 2.1% per annum* includes a corresponding allowance to that made in the latest formal actuarial valuation for short-term public sector pay restraint.

The demographic assumptions are the same as those used for funding purposes. Full details of these assumptions are set out in the formal report on the actuarial valuation dated March 2017.

During the year, corporate bond yields decreased slightly, resulting in a lower discount rate being used for IAS 26 purposes at the year-end than at the beginning of the year (2.4% p.a. versus 2.6% p.a.). The expected long-term rate of CPI inflation increased during the year, from 2.1% p.a. to 2.2%. Both of these factors served to increase the liabilities over the year.

The value of the Fund’s promised retirement benefits for the purposes of IAS 26 as at 31 March 2018 was estimated as £6,453 million. Interest over the year increased the liabilities by c£169 million, and allowing for net benefits accrued/paid over the period also increased the liabilities by c£72 million (after allowing for any increase in liabilities arising as a result of early retirements/augmentations). We have also included an amount of £40 million by way of an estimate of the effect of the McCloud judgement (see note below for further details). There was then an increase in liabilities of £368 million due to “actuarial gains” (i.e. the effect of changes in the actuarial assumptions used, referred to above).

The net effect of all the above is that the estimated total value of the Fund’s promised retirement benefits as at 31 March 2019 is therefore £7,102 million.


The McCloud Case

The value of the Fund’s promised retirement benefits for the purposes of IAS 26 as at 31 March 2018 was Sargeant and McCloud (which for the purposes of the LGPS has generally been shortened to “McCloud”), relating to the Firefighter unfunded pension schemes and the Judicial pension arrangements. In essence, the Court held that the transitional protections, which were afforded to older members when the reformed schemes were introduced in 2015, constituted unlawful age discrimination. The Government attempted to appeal the cases, but it was announced on 27 June 2019 that the appeal had been refused by the Supreme Court. Remedial action in the form of increases in benefits for some members of the Firefighter and Judicial arrangements will almost certainly be required. There may well be knock-on effects for the other public service schemes, and the LGPS might therefore also be required to take some action. At this state it is unclear what the extent of any potential remedial action might be.

We have carried out some costings of the potential effect of McCloud as at 31 March 2019, based on the individual member data as supplied to us for the 2016 actuarial valuation, and this results in an additional liability of £40 million using the IAS26 assumptions outlined above. The approach to the calculations is as instructed by the administering authority after consideration of the categories of members potentially affected, but in very broad terms calculates the cost of applying a “final salary underpin” (on a member by member basis) to those active members who joined the Fund before 1 April 2012 and who would not otherwise have benefited from the underpin.

GMP Equalisation

respect of service after 17 May 1990 (the date of the “Barber” judgment) and this includes providing equal benefits accrued from that date to reflect the differences in GMPs. Previously, there was no consensus or legislative guidance as to how this might be achieved in practice for ongoing schemes, but the 26 October 2018 Lloyds Bank court judgement has now provided further clarity in this area. However, in response to this judgement HM Treasury stated that “public sector schemes already have a method to equalise guaranteed minimum pension benefits, which is why we will not have to change our method as a result of this judgment”, clearly implying that the Government (who have the overall power to determine benefits provision) believe the judgement itself will not affect the benefits. Therefore, the natural conclusion for the main public service pension schemes including the Local Government Pension Scheme is that it is not appropriate for any provision to be included for the effect of the Lloyds Bank judgment, at least at the present time, and so no allowance has been made for any additional liabilities within the above figures at this stage. However, in due course there may be a further cost to the LGPS in connection with equalisation/indexation, when the Government confirms the overall approach which it wishes to adopt in this area following its consultation.

16. TRANSFERS IN

During the year ending 31 March 2019 there were no group transfers in to the fund.

17. AGENCY SERVICES

The Fund makes payments with regard to added year benefits awarded by the Employer to Local Government Pension Scheme members, including related pension increases. The Fund also pays a small number of other pension supplements. These are not funded by the Fund and are recharged in full. They are not included in the Fund Account.

2018/19 2017/18£’000 £’000

Benefits Paid and Recharged 5,882 5,895

The Fund also administers £25.6m pension payments on behalf of the Fire Service and the Teachers’ pension schemes. (£21.8m in 2017/18, including a large number of Retirement Lump Sum payments). These are not funded by the Fund and are recharged in full. They are not included in the Fund Account. The Fire Service and Teachers’ employers also pay for the cost of providing this service.


18. ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVCS)

Scheme members may make Additional Voluntary Contributions that are invested in insurance policies with The Equitable Life Assurance Society or Aviva, the Fund’s nominated AVC providers. Additional Voluntary Contributions received from employees and paid to The Equitable Life Assurance Society during 2018/19 were £55 (2017/18 - £55). Additional Voluntary Contributions received from employees and paid to Aviva during 2018/19 were £375,694 (2017/18 - £288,295).

The total value of the assets invested, on a money purchase basis, with these AVC providers was:-

31 March 2019 31 March 2018£’000 £’000

Equitable LifeWith Profits Retirement Benefits 315 352 Unit Linked Retirement Benefits 317 339 Building Society Benefits -

632 691

Death in Service Benefit 53 53

31 March 2019 31 March 2018£’000 £’000

AvivaWith Profits Retirement Benefits 79 97 Unit Linked Retirement Benefits 3,763 4,114 Cash Fund 378 208

4,220 4,419

AVC contributions are not included in the Fund’s financial statements as they do not come under the requirements of Regulation 4(1)(b) of the Pension Scheme (Management and Investment of Funds) Regulations 2016 regarding regulation 69(1)(a) of the Local Government Pension Scheme Regulations 2013.

19. RELATED PARTIES

Committee Member Related:-In 2018/19 £38,250 was charged to the Fund in respect of Allowances paid to the voting Members of the Avon Pension Fund Committee (£40,557 in 2017/18). Seven voting members and one non- voting member of the Avon Pension Fund Committee (including three B&NES Councillor Members) were members of the Local Government Pension Scheme during the financial year 2018/2019. (Six voting members and two non-voting members in 2017/2018, including three B&NES Councillor Members)

Independent Member Related:-Three Independent Members were paid allowances of £14,817, £12,246 and £1,679 respectively during the year for their work in relation to the Pension Fund Committee and the Investment Panel. One Member was paid in respect of the full year, two were paid in respect of part of the year each. They are entitled to claim reasonable expenses which are included in the above allowances. The Independent Members are not eligible to join the Local Government Pension Scheme.

Employer Related:-During the year 2018/19 the Fund paid B&NES Council £436,428 for administrative services (£437,520 in 2017/18). Various Employers paid the fund a total of £191,825 for pension related services including pension’s payroll and compiling data for submission to the actuary (£258,817 in 2017/18).

Pension Board Related:-The Pension Board came in to operation in July 2015. In 2018/19 £7,843 was charged to the Fund in respect of Allowances and expenses paid to the Members of the Pension Board (£7,129 in 2017/18). Five members of the Pension Board were members of the Local Government Pension Scheme during the financial year 2018/2019. (Five


members in 2017/2018).

Officer and Manager Related:-The officers administering the Avon Pension Fund are all eligible to be members of the Avon Pension Fund. The Fund is governed by Central Government regulation. There are no other related party transactions except as already disclosed elsewhere.

Brunel Pension Partnership Limited:-Brunel Pensions Partnership Lmited (BPP Ltd.) Company number 10429110) was formed on the 14th October 2016 and will oversee the investment of pension fund assets for Avon, Buckinghamshire. Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset, and Wiltshire Funds.

Each of the 10 local authorities, including Bath & North East Somerset Council own 10% of BPP Ltd. In 2018/19 the Pension Fund paid BPP £998,932 (2017/18 £840,000). As part of our investment in BPP Ltd. we provided regulatory capital. This will be subject to regular review by the regulator that could result in additional calls for capital.

20. KEY MANAGEMENT REMUNERATION

Of Bath & North East Somerset Council’s key management personnel, some of the remuneration costs were charged to the fund to reflect the time spent. These consisted of:

• part of the Head of Business Finance and Pensions salary, fees and allowances £38,784 (2017/18 £38,784) and their post employment benefits (pensions) £11,200 (2017/18 £11,200).

• part of the Divisional Director Risk and Assurance’s salary, fees and allowances £8,190 (2017/18 £8,190) and their post employment benefits (pensions) £2,400 (2017/18 £2,400).

The Section 151 Officer’s costs have not been included as the Pension Fund is recharged on a time spent basis and their salary is accounted for in Bath & North East Somerset’s accounts.

The method of calculating the above figures has been revised. Previous year’s figures overstated salaries by including of overheads, and disclosed employer contributions instead of pension benefits accrued. In 2017/18 salaries (including overheads) were disclosed as £50,167 and £10,600. Employer’s pension contributions were disclosed as £9,498 and £2,000.

21. OUTSTANDING COMMITMENTS

As at the 31 March 2019 the Fund had outstanding commitments relating to investments in Property, Infrastructure and Secure Income funds that will be drawn down in tranches by the Investment Managers totalling £333,320,665. (31 March 2018 £113,752,557). The increase is due to the new commitments made in the year to Secured Income and Infrastructure.


22. FINANCIAL INSTRUMENTSThe net assets of the Fund are made up of the following categories of Financial Instruments:

2018/19 Fair value through profit and loss

Assets at amortised cost

Financial liabilities at

amortised costFinancial assets £’000 £’000 £’000Equities 554,790Long Term Investment 395 Pooled Investments (Non-Property) 3,150,535Liability Driven Pooled investments 580,817 Pooled Property Investments 428,752 Derivative Contracts FX Hedge 7,984 Derivative contracts Futures 349 Cash 105,230 Other investment balances 3,486Debtors 13,149Total Financial Assets 4,727,108 118,379 -

Financial LiabilitiesOther investment balancesDerivative Contracts Equity Options (12,585) Creditors (15,075) Total Financial Liabilities (12,585) - (15,075)

Total Net Assets 4,714,523 118,379 (15,075)

2017/18 Fair value through profit and loss

Assets at amortised cost

Financial liabilities at

amortised costFinancial assets £’000 £’000 £’000Equities 1,075,449Long Term Investment 840 Pooled Investments (Non-Property) 2,370,883Liability Driven Pooled investments 521,212 Pooled Property Investments 410,899 Derivative Contracts FX Hedge 13,840 Derivative contracts Futures 15,010 Cash 195,676 Other investment balances 5,096 Debtors 11,961 Total Financial Assets 4,413,229 207,637 -

Financial LiabilitiesOther investment balancesDerivative Contracts Equity Options (598) Creditors (19,343) Total Financial Liabilities (598) - (19,343)

Total Net Assets 4,412,631 207,637 (19,343)


Net gains and losses on Financial Instruments

RESTATED31 March 2019 31 March 2018

£’000 £’000Financial assetsFair value through profit and loss 254,512 164,001 Amortised Cost - realised gains on derecognition of assetsAmortised cost - unrealised gains 19,316 19,088

Financial LiabilitiesFair value through profit and loss (52,459)Amortised Cost - realised losses on derecognition of assetsAmortised cost - unrealised losses

221,369 183,089

23. FINANCIAL RISK MANAGEMENT DISCLOSURE

The primary objective of the Avon Pension Fund is to generate positive real investment return above the rate of inflation for a given level of risk to meet the liabilities as they fall due over time. The aim of the investment strategy and management structure is to minimise the risk of a reduction in the value of the assets and maximise the opportunity for asset gains across the portfolio of assets.

The Fund achieves this objective by investing across a diverse range of assets such as equities, bonds, property and other alternative investments in order to reduce exposure to a variety of financial risks including market risk (price, interest rate and currency risk), credit risk and liquidity risk.

Responsibility for the fund’s risk management strategy rests with the pension fund committee. Risk management policies are established to identify and analyse the risks faced by the pension fund. Policies are reviewed regularly to reflect changes in activity and in market conditions.

The Fund’s investments are managed by external Investment Managers who are required to invest in accordance with the terms of the agreed investment guidelines that set out the relevant benchmark, performance target, asset allocation ranges and any restrictions. The Avon Pension Fund Committee has determined that the investment management structure is appropriate and is in accordance with its investment strategy. The Committee regularly monitors each investment manager and its Investment Consultant advises on the nature of the investments made and associated risks.

As the Fund’s assets transition to Brunel Pension Partnership (Brunel) over the next few years, the current roster of external managers will reduce as Brunel takes over responsibility for managing the portfolios. At 31 March 2019, only the passively managed Low Carbon Global Equity and Actively managed UK Equity assets had transferred to Brunel. In addition Brunel is investing new monies allocated to Secured Income and Renewable Infrastructure.The Fund’s investments are held by State Street Bank and Trust who acts as custodian on behalf of the Fund.

Because the Fund adopts a long term investment strategy, the high level risks described below will not alter significantly during any one year unless there are significant strategic or tactical changes to the portfolio. The risk management process identifies and mitigates the risks arising from the Fund’s investment strategy and policies which are reviewed regularly to reflect changes in market conditions.

(a) Market Risk

Market risk is the risk of loss from fluctuations in market prices, interest rates, credit spreads and currencies. The Fund is exposed through its investments portfolio to all these market risks. The level of risk exposure depends on market conditions, expectations of future price and yield movements and asset allocation. The objective of the investment strategy is to identify, manage and control market risk within acceptable parameters, while optimising the return.

Volatility in market risk is primarily managed through diversification across asset class and investment managers.


Market Price Risk

Market price risk represents the risk that the value of a financial instrument will fluctuate caused by factors other than interest rates or currencies. These changes can be caused by factors specific to the individual instrument, its issuer or factors affecting the market in general and will affect the assets held by the Fund in different ways.

All investments present a risk of loss of capital. By diversifying its investments across asset classes, geography and industry sectors, investment mandate guidelines and Investment Managers the Fund aims to reduce its exposure to price risk. Diversification seeks to reduce the correlation of price movements. The risk arising from exposure to specific markets is limited by the strategic asset allocation, which is regularly monitored by the Committee against the strategic benchmark.

The Fund’s largest allocation is to equities and therefore the fluctuation in equity prices is the largest market risk within the portfolio. The maturity profile of the Fund and strong underlying covenant underpins the allocation to equities which are expected to deliver higher returns over the long term.

The Fund has an equity hedging strategy in place to protect from a significant fall in equity values. The strategy was implemented to protect the improvement in the funding level since the 2016 valuation which has been primarily driven by the rise in equity values. Equity index options have been used to protect the downside and to cap the upside above a fully funded position based on the current funding plan.

Assessing the potential impact of Brexit on markets and projecting asset price movements is difficult as each political scenario could have a range of market impacts. However, the positioning of the Fund’s investment strategy means that the potential impact of unfavourable market events on the Fund’s assets will be moderated. Given a material part of the Fund’s overall investment strategy (over 50%) is invested in non-UK assets,the expected risk associated with various Brexit scenarios should be limited. The investment strategy is globally diversified from a currency, country of risk, sector and issuer perspective and this would be expected to reduce volatility in the event of an adverse outcome. Moreover, non-sterling currency exposure from the developed global equities, hedge fund, global property and infrastructure mandates is hedged back to sterling (partially in the case of equities) in order to reduce the impact from currency volatility that may result.

Market Price Risk - Sensitivity Analysis

The sensitivity of the Fund’s investments to changes in market prices has been analysed using the volatility of returns of the assets held within the Fund (provided by the Fund’s advisors). The potential volatilities are consistent with a one standard deviation movement in the change in value of the assets over the three years to 31 March 2019. This analysis assumes all other variables including interest rates and foreign currency exchange rates remain the same.

Movements in market prices could have increased or decreased the net assets available to pay benefits by the amounts shown below. However, the likelihood of this risk materialising in normal circumstances is low by virtue of the diversification within the Fund.

The equity hedge does not affect the expected volatility of the equity assets. The hedging strategy caps the upside for the equity assets to around 8.3% plus dividends and protects the equity assets if markets fall by more than 10% from the market level when the strategy was implemented. The unrealised gain/loss on the equity index options has been added to the Global Equities value in the table below.


The analysis for the year ending 31 March 2019 is shown below:

Asset Type Value Change Value on Increase Value on Decrease£’000 % £’000 £’000

UK Equities 385,116 9.4% 421,317 348,915 Global Equities 1,393,569 10.2% 1,535,713 1,251,425 Emerging Market Equities

228,531 16.0% 265,096 191,966

UK Bonds 86,168 5.3% 90,735 81,601 Liability Driven Investments 580,817 12.6% 654,000 507,634


597,717 5.3% 629,396 566,038

Multi Asset Credit 410,444 2.8% 421,937 398,952 Property 428,751 2.1% 437,755 419,747 Fund of Hedge Funds 232,127 3.8% 240,948 223,306 Infrastructure 342,723 12.3% 384,878 300,568 Secured Income 16,695 1.5% 16,946 16,445 Long Term Investment 395 15.0% 454 336 Cash & Equivalents 116,700 0.1% 116,817 116,583 Total Investment Assets

4,819,753 5,215,990 4,423,516

The analysis for the year ending 31 March 2018 is shown below:


UK Equities 371,893 9.5% 407,223 336,563 Global Equities 1,206,893 10.2% 1,329,996 1,083,790 Emerging Market Equities

221,709 16.0% 257,182 186,235

UK Bonds 82,124 5.6% 86,723 77,525 Liability Driven Investments 521,211 12.3% 585,320 457,102


602,103 5.3% 634,015 570,192

Multi Asset Credit 482,296 3.8% 500,623 463,969 Property 410,899 2.2% 419,939 401,859 Fund of Hedge Funds 210,133 4.0% 218,539 201,728 Infrastructure 283,594 13.0% 320,461 246,727 Long Term Investment 840 15.0% 966 714 Cash & Equivalents 214,612 0.1% 214,827 214,397 Total Investment Assets

4,608,307 4,975,814 4,240,801

Interest Rate Risk

Interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates which will affect the value of fixed interest and index linked securities (“bonds”).

The Fund’s exposure to interest rate movements on these investments is provided below. Cash includes the cash deposits held against futures contracts.


31 March 2019 31 March 2018£’000 £’000

Cash and Cash Equivalents 116,700 214,612Bonds 666,984 603,335Total 783,684 817,947

Interest Rate Risk - Sensitivity Analysis

Fluctuations in interest rates can affect both income to the Fund and the value of the net assets to pay benefits. The sensitivity of the Fund’s investments to changes in interest rates has been analysed by showing the effect on the value of the bonds as at 31 March 2019 of a 100 basis point (1%) change in interest rates. The analysis assumes that all other variables including foreign currency exchange rates remain constant.

The Fund has implemented a strategy to better match or hedge its liabilities with bond assets (called “Liability Driven Investment”). The primary instruments used in this strategy to hedge the liabilities are physical index linked gilts and index-linked gilt repos, whilst other derivative instruments are used to manage the hedge profile.

An increase or decrease of 100 basis points (bps) in interest rates would have increased or decreased the net assets by the amount shown below.

Value Change in net assetsAs at 31 March 2019 £’000 +100 bps -100 bpsCash and Cash Equivalents 116,700 0 0Fixed Interest 666,984 (136,811) 136,811 Total 783,684 (136,811) 136,811

A 1% rise in interest rates will reduce the fair value of the relevant net assets and vice versa. Changes in interest rates do not impact the value of cash balances but they will affect the interest income received on those balances.

The same analysis for the year ending 31 March 2018 is shown below:

Value Change in net assetsAs at 31 March 2018 £’000 +100 bps -100 bpsCash and Cash Equivalents 214,612 - -Fixed Interest 603,335 (128,754) 128,754Total 817,947 (128,754) 128,754

Currency Risk

Currency risk represents the risk that the fair value of financial instruments when expressed in Sterling will fluctuate because of changes in foreign exchange rates. The Fund is exposed to currency risk on investments denominated in a currency other than Sterling. A significant proportion of the Fund’s equity portfolio is invested in overseas stocks, overseas property, infrastructure and hedge funds (where the shares are denominated in US dollars). When sterling depreciates the sterling value of foreign currency denominated investments will rise and when sterling appreciates the sterling value for foreign denominated investments will fall. The Fund has a passive hedging arrangement in place which reduces the volatility of returns over the longer term (the hedging programme hedges the exposure to the US Dollar, Yen and Euro).

Where an investment manager chooses to hedge against foreign currency movements within their portfolio forward foreign exchange contracts are used.

The following tables summarise the Fund’s currency exposures within the portfolio. For the global property funds the share class of the pooled funds held has been used.


Currency risk by asset class:

Currency Exposure - Asset Type Asset value as at 31 March 2019

Asset value as at 31 March 2018

£’000 £’000Overseas Equities 1,393,569 1,206,893Overseas Property 201,187 201,320Fund of Hedge Funds 232,127 210,133Infrastructure 342,723 283,594

Currency Risk - Sensitivity Analysis

The sensitivity of the Fund’s investments to changes in foreign currency rates has been analysed using the volatility which is broadly consistent with a one-standard deviation movement in the main currencies over the 3 years to 31 March 2019. The analysis reflects the Fund’s passive hedging policy of a 50% hedge ratio on the global equity assets, and a 100% hedge ratio on the global property, infrastructure and hedge fund assets. Therefore there is no currency exposure on the assets that are 100% hedged.

A strengthening / weakening of Sterling against the various currencies by one standard deviation (expressed as a percentage) at 31 March 2019 would have increased / decreased the net assets by the amount shown in the tables below and vice versa:

Currency Risk by Asset Type:


Overseas Equities 1,393,569 4.65% 1,458,330 1,328,808

The same analysis for the year ending 31 March 2018 is shown below:

Currency Risk by Asset Type:


Overseas Equities 1,206,893 5.05% 1,267,841 1,145,945

(b) Credit Risk

Credit risk is the risk that the counterparty to a financial instrument or transaction will fail to meet an obligation and cause the Fund to incur a financial loss. In addition, the market values of investments will reflect an assessment of creditworthiness in their pricing and therefore the risk of loss is implicitly provided for in the carrying value of the assets and liabilities.

The entire Fund is exposed to credit risk through its underlying investments (including cash balances) and the transactions it undertakes to manage its investments. The careful selection and monitoring of counterparties including brokers, custodian and investment managers minimises credit risk that may occur though the failure to settle transactions in a timely manner.

Contractual credit risk is represented by the net payment or receipt that remains outstanding, and the cost of replacing the derivative position in the event of a counterparty default. Credit risk on exchange-traded derivative contracts is minimised by the various insurance policies held by exchanges to cover defaulting counterparties. Over-the-counter (OTC) derivative contracts are bilateral agreements where the Fund faces the credit risk of the financial counterparty directly. This is the case for forward currency contracts where a line of credit is extended to the Fund in place of a collateral posting agreement (as is the case for exchange-traded contracts). The hierarchy and replacement of an OTC contract on default of one of the counterparties is detailed in the ISDA, which is a market standard legal document governing derivative contracts.


Forward currency contracts are entered into by the Fund’s managers, especially the currency hedging manager, Record. These contracts are subject to credit risk in relation to the counterparties of the contracts. The responsibility for managing these contracts and counterparty risk rests with the managers. Counterparty management is evaluated as part of the due diligence process prior to appointing a manager.

The Fund’s bond portfolios have significant credit risk through their underlying investments. This risk is managed through diversification across sovereign and corporate entities, credit quality and maturity of bonds. The market prices of bonds incorporate an assessment of credit quality in their valuation which reflects the probability of default (the yield of a bond will include a premium that will compensate for the risk of default).

Another source of credit risk is the cash balances held to meet operational requirements or by the managers at their discretion. Internally held cash is managed on the Fund’s behalf by the Council’s Treasury Management Team in line with the Fund’s Treasury Management Policy which sets out the permitted counterparties and limits. Cash held by the Fund and managers is invested with the custodian in diversified money market funds rated AAA.

The cash held under the Treasury Management arrangements and by the custodian as at 31 March 2019 was £22.1m. This was held with the following institutions:

31 March 2019 31 March 2018Rating £’000 Rating £’000

Custodian’s Liquidity FundState Street Global Services AAA 7,735 AAA 61,427

Bank Call AccountsHandelsbanken AA 3,250 AA 10Bank of Scotland Corporate Deposit Account A+ 90 A+ 90Goldman Sachs Global Treasury Fund AAA 30 AAA 20Standard life AAA 810 AAA 7,570Federated Investors AAA 9,780 AAA 680NatWest Special Interest Bearing Account A+ 340 BBB+ -

AAA 90 Bank Current Accounts NatWest A+ 8 BBB+ 15

A securities lending programme is managed by the Fund’s custodian State Street Bank and Trust who manage and monitor the counterparty risk, collateral risk and the overall lending programme. Through its securities lending activities, the Fund is exposed to the counterparty risk of the collateral provided by borrowers against the securities lent. The minimum level of collateral for securities on loan is 102%, however more collateral may be required depending upon the type of transaction. This level is assessed daily to ensure it takes account of market movements. The current collateral the Avon Pension Fund accepts is AAA rated supranational debt, AA rated sovereign debt and FTSE Equity DBV. Cash collateral is not permitted.

(c) Liquidity Risk

Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund’s investment strategy and cash management policy ensure that the pension fund has adequate cash to meet its working requirements including pension payments. Cash flow forecasts are prepared to manage the timing of and changes to the Fund’s cash flows. The Fund has access to an overdraft facility for short term cash needs which was not drawn on during the year.

The Fund has immediate access to its cash holdings and a substantial portion of the Fund’s investments consist of readily realisable securities, in particular equities and fixed income investments, even though a significant proportion is held in pooled funds. In addition the Fund invests in a range of Exchange Traded Funds that provide a similar liquidity profile to cash so that capital calls from the private market portfolios can be managed efficiently. These are classed as liquid assets as they can be converted to cash within 3 months. The main liabilities of the Fund are the benefits payable as they fall due over a long period and the investment strategy reflects the long term nature of these liabilities. As a result the Fund is able to manage the liquidity risk that arises from its investments in less


liquid asset classes such as property, infrastructure and fund of hedge funds which are subject to longer redemption periods and cannot be considered as liquid as the other investments. As at 31 March 2019 the value of the illiquid assets was £1,021m, or 21.2% of the total Fund assets (31 March 2018: £905m which represented 19.6% of the total Fund assets).

24. FAIR VALUE HEIRARCHY

Fair value is the value at which the investments could be realised within a reasonable timeframe. The Fund measures fair values using the following fair value hierarchy that reflects the subjectivity of the inputs used in making an assessment of fair value. This hierarchy is not a measure of investment risk but a reflection of the ability to value the investments at fair value. The hierarchy has the following levels:

• Level 1 – Asset and liabilities where the fair value is derived from unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Assets and liabilities where quoted market prices are not available but uses inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. For example where an instrument is traded in a market that is not considered to be active, or where valuation techniques based significantly on observable market data are used to determine fair value.

• Level 3 – assets and liabilities where at least one unobservable input used to measure fair value could have a significant effect on the valuation and the Fund’s holding in these pooled funds is not immediately realisable at the net asset value.

Fair Value Hierarchy

The basis of the valuation of each class of investment asset is set out below.

Description of asset

Fair Value Hierarchy

Basis of valuation Observable and unobservable inputs

Key sensitivities affecting the valuations provided

Market quoted investments

Level 1 Published closing bid price ruling at year

end.

Not required. Not required.

Exchange traded futures and forward currency contracts

Level 1 Published exchange prices at the year

end.

Not required. Not required.

Pooled equity, credit, bond funds

Level 2 Closing bid price where bid and offer

prices are published; closing single price where single price

published.

NAV based pricing set on a forward

looking basis.

Not required.

Diversified Growth Funds and Multi

Asset Funds



published.


looking basis.

Not required.

Pooled property funds



published.


looking basis.

Not required.

Over the counter Equity Index Options

Level 2 Valued using formula reflecting quoted market and index

prices

Inputs to the formula are market prices

of quoted securities and derivatives; time value of the contract.

Not required.


Secured Income Level 3 Closing bid price where bid and offer

prices are published; closing single

price where single price published.

Redemption restrictions apply.


looking basis.

Valuations can be affected by material events between the date of the financial accounts provided and the pension

fund’s own reporting date, by changes to expected cash flows and by any

differences between the audited and

unaudited accounts.Hedge Funds Level 3 Closing bid price

where bid and offer prices are published; closing single price where single price

published.


looking basis.

Valuations can be affected by material events between the date of the financial accounts provided and the pension

fund’s own reporting date, by changes to expected cash flows and by any

differences between the audited and

unaudited accounts.Limited Partnerships

and closed ended funds

Level 3 Valued using a number of different market and income

valuation methods as well as comparable market transactions

prices.

Market transactions; market outlook; cash flow projections; last financings; multiple

projections.

Valuations could be affected by material

events occurring between the date

of the financial statements provided

and the pension fund’s own reporting date, by changes to expected cash flows and any differences

between audited and unaudited accounts.

Infrastructure funds Level 3 Infrastructure investments are

valued at the end of each quarter by independent valuation firms. The valuation

method is employed for each asset

at the discretion of the appointed

independent valuer but must fall within

the standards prescribed under AASB 139, US

GAAP ASC 820 and ASC 825 (formerly FAS 157 and 159),

as appropriate.

Infrastructure investments are

typically valued on a discounted cash

flow approach, utilising cash flow

forecasts. Valuations are cross-checked with public market information and

recent transactions.




and the pension fund’s own reporting date, by changes to expected cash flows, significant increases

and decreases in the discount rate

and any differences between audited and unaudited accounts.


Long Term Investments -

Equities

Level 3 Brunel Share Capital is valued

at the Equity value as stated in Brunel

Pension Partnership Statement of

Accounts

Earnings and revenue multiples; discount for lack of

marketability; control premium




and the pension fund’s own reporting date, by changes to expected cash flows and any differences

between audited and unaudited accounts.

The following sets out the Fund’s financial assets and liabilities measured at fair value according to the fair value hierarchy at 31 March 2019.

Level 1 Level 2 Level 3 Total£’000 £’000 £’000 £’000

Equities – Quoted 626,394 1,380,472 2,006,866 Bonds – Quoted - 86,168 86,168 Pooled Investments :- Liability Driven Investments - 580,817 580,817 Fund of Hedge Funds - 232,127 232,127 Diversified Growth Funds - 597,717 597,717 Multi Asset Credit - 410,444 410,444 Property - 227,565 201,187 428,751 Infrastructure - - 342,723 342,723 Secured Income - - 16,695 16,695 Long Term Investment - - 395 395 Cash 105,377 - 105,377 Derivatives: Forward FX 7,984 - - 7,984 Derivatives: Futures 350 - - 350 Investment Debtors /Creditors 3,339 - - 3,339

743,444 3,283,182 793,127 4,819,753

There has been no re-classification of assets between levels of the hierarchy between 31 March 2018 and 31 March 2019.

Level 1 and level 2 assets were sold during the year to fund the investment in Secured Income and Renewable Energy Infrastructure assets.


Reconciliation of Fair Value measurements within Level 3

Level 3 Market Value 01

April 2018

Transfer into Level 2

Purchases during the year and

derivative payments

Sales during the year and

derivative receipts

Unrealised gains / losses

Realised gains / losses

Market value 31 March 2019

£’000 £’000 £’000 £’000 £’000 £’000 £’000Fund of Hedge Funds 201,320 - - - (133) 201,187

Property 210,133 - - - 21,994 232,127 Infrastructure 283,595 - 11,690 - 47,438 342,723 Secure Income - - 16,493 - 202 16,695

Long Term Investment - Equities

840 - - - (445) 395

695,888 - 28,183 - 69,056 793,127

Sensitivity of assets valued at Level 3

Having consulted its investment advisor, and having analysed historical data and market trends, the Fund has determined that the valuation methods used for Level 3 assets are likely to be accurate to within the following ranges on the closing value of the investments held at 31 March 2019. This assessment does not allow for any specific impact from Brexit on investment assets. The assets valued at Level 3 have a bias to non-UK assets with the exception of Secured Income and the Long term Investment and therefore any potential impact should be moderated; however it is possible that in the short term Brexit may cause greater variance in values than indicated in the table.

Level 3 assets Assessed valuation range

+/-


Value on increase

Value on decrease

£’000 £’000 £’000Property 10% 201,187 221,305 181,068 Fund of Hedge funds 10% 232,127 255,340 208,914 Infrastructure 15% 342,723 394,132 291,315 Secure Income 10% 16,695 18,365 15,026 Long Term Investment - Equities 15% 395 454 336 Total 793,127 889,596 696,658

The same analysis for 31 March 2018:

Level 3 assets Assessed valuation range

+/-


Value on increase

Value on decrease

£’000 £’000 £’000Property 10% 201,321 221,452 181,188 Fund of Hedge funds 10% 210,133 231,147 189,120 Infrastructure 15% 283,594 326,133 241,055 Secure Income 10% - - - Long Term Investment - Equities 15% 840 966 714 Total 695,888 779,698 612,077


25. EMPLOYING BODIES

As at 31 March 2019 the following employing bodies had contributing scheme members in the Avon Pension Fund:

Scheduled BodiesPrincipal Councils and Service ProvidersAvon Fire & Rescue Service North Somerset Council Bath & North East Somerset Council South Gloucestershire Council Bristol City Council West of England Combined Authority

Further & Higher Education EstablishmentsBath Spa University St. Brendan’s Sixth Form CollegeBath College University of the West of EnglandCity of Bristol College Weston CollegeSouth Gloucestershire & Stroud College

Academies and Schools Abbeywood Community School Midsomer Norton Primary SchoolAbbot Alphege Academy Midsomer Norton Schools PartnershipAshcombe Primary School Milton Park Primary SchoolAshton Park School Minerva Primary AcademyAshton Vale Primary School Moorlands Infant SchoolAspire Academy Moorlands Junior SchoolBackwell C of E Junior School Mulberry Park Educate Together PrimaryBackwell School Nailsea SchoolBadock's Wood E-ACT Academy New Siblands SchoolBannerman Road Community Academy North Somerset Enterprise & Technology CollegeBarton Hill Academy Northleaze C of E Primary SchoolBathampton Primary School Notton House AcademyBatheaston Church School Oasis Academy Bank LeazeBathford Church School Oasis Academy BrightstoweBathwick St Mary Church School Oasis Academy BrislingtonBecket Primary School Oasis Academy ConnaughtBedminster Down School Oasis Academy John WilliamsBeechen Cliff School Oasis Academy Long CrossBegbrook Primary Academy Oasis Academy Marksbury RoadBirdwell Primary School Oasis Academy New OakBishop Sutton Primary School Oldfield Park Infant SchoolBournville Primary Academy Oldfield Park Junior SchoolBradley Stoke Community School Oldfield SchoolBridge Learning Campus Oldmixon Primary SchoolBristol Cathedral School Trust Olympus Academy TrustBristol Free School Orchard School BristolBristol Futures Academy Parklands Educate Together PrimaryBristol Technology & Engineering Academy Parson Street Primary SchoolBroadlands Academy Patchway Community SchoolBroadoak Mathematics & Computing College Peasedown St John Primary School Cabot Learning Federation Perry Court E-ACT AcademyCallicroft Primary School Portishead Primary School


Castle Batch Primary School Priory Community SchoolChandag Infant School Ralph Allen SchoolChandag Junior School Redfield Educate Together Primary AcademyCharborough Road Primary School Roundhill Primary SchoolCharfield Primary School Saltford C of E Primary SchoolCheddar Grove Primary School Severn Beach Primary SchoolChew Stoke Church School SGS Pegasus SchoolChew Valley School Shoscombe Church SchoolChrist Church C of E Primary School (Bristol) Sir Bernard Lovell AcademyChrist Church C of E Primary School (WSM) Somerdale Educate Together Primary AcademyChurchill Academy St Andrew's Church SchoolCity Academy St Anne's C of E VA Primary SchoolClevedon School St Bede's Catholic CollegeClutton Primary School St Georges Church SchoolColston's Girls' School St John the Evangelist Church SchoolCombe Down C of E Primary School St John's C of E Primary School (Keynsham)Compass Point South Street Primary School St John's C of E Primary School (MSN)Cotham Gardens Primary School St Julian's C of E Primary SchoolCotham School St Katherine's SchoolCourt de Wyck Church School St Mark's Ecumenical Anglican/Methodist Primary

SchoolCrockerne C of E Primary School St Martin's C of E Primary SchoolCulverhill School St Martin's Garden Primary SchoolDigitech Studio School St Mary Redcliffe C of E Primary SchoolDiocese of Bristol Academy Trust St Mary's C of E VA Primary SchoolDownend School St Matthias AcademyDundry C of E Primary School St Michael's C of E Junior Church SchoolEast Harptree Primary School St Nicholas Chantry C of E VC Primary SchoolEaston C of E Academy St Nicholas of Tolentine Catholic SchoolElmlea Junior School St Patrick’s Catholic Primary SchoolEndeavour Academy Trust St Peter's C of E Primary SchoolEvergreen Primary Academy St Philip's C of E Primary SchoolFairfield High School St Saviours Infant Church SchoolFairlawn Primary School St Saviours Junior Church SchoolFarmborough Church Primary School St Stephen's Primary Church SchoolFarrington Gurney C of E Primary School St Teresa’s Catholic Primary SchoolFederation of Hannah More Infant School St Ursula's E-ACT Primary AcademyFilton Avenue Primary School Stanton Drew Primary SchoolFilton Hill Primary School Steiner Academy BristolFishponds Church of England Academy Stoke Bishop C of E Primary SchoolFlax Bourton Primary School Stoke Lodge Primary SchoolFonthill Primary School Summerhill AcademyFosse Way School The Bath Studio SchoolFour Acres Academy The Castle SchoolFreshford Church School The Dolphin SchoolFrome Vale Academy The Kingfisher SchoolGatehouse Green Learning Trust The Meadows Primary SchoolGordano School Three Ways School


Greenfield E-ACT Primary Academy Tickenham C of E Primary School Grove Junior School Trinity Anglican Methodist Primary SchoolHanham Woods Academy Trinity Church SchoolHans Price Academy Trust in LearningHareclive E-ACT Academy Ubley Primary SchoolHayesfield Girls School Venturers' AcademyHaywood Village Academy Venturers' TrustHeadley Park Primary School Victoria Park Primary SchoolHenbury Court Primary Academy Walliscote Primary SchoolHenbury School Wallscourt Farm AcademyHenleaze Junior School Wansdyke Primary SchoolHeron’s Moor Academy Waycroft AcademyHigh Down Infant School Wellsway SchoolHigh Down Junior School Welton Primary SchoolHigh Littleton C of E Primary School West Leigh Infant SchoolHotwells Primary School West Town Lane AcademyHutton C of E Primary School Westbury Park Primary SchoolIKB Academy Westbury-on-Trym C of E AcademyIlminster Avenue E-ACT Academy Westfield Primary SchoolKings Oak Academy Weston All Saints C of E Primary SchoolKingshill Church School Wicklea AcademyKnowle DGE Academy Widcombe C of E Junior School Lansdown Park Academy Widcombe Infant SchoolLittle Mead Primary Academy Windwhistle Primary SchoolLocking Primary School Winford CofE Primary SchoolLongvernal Primary School Winterbourne International AcademyLuckwell Primary School Woodlands AcademyLyde Green Primary School Worle Community SchoolMangotsfield School Worle Village Primary SchoolMarksbury C of E Primary School Wraxall C of E Voluntary Aided Primary SchoolMarlwood School Writhlington SchoolMary Elton Primary School Yate AcademyMead Vale Community Primary School Yatton C of E Junior SchoolMeadowbrook Primary School Yatton VC Infant SchoolMendip Green Primary School Yeo Moor Primary School Merchants' Academy

Designating BodiesAlmondsbury Parish Council Patchway Town CouncilBackwell Parish Council Paulton Parish CouncilBradley Stoke Town Council Peasedown St John Parish CouncilBristol Waste Company Pill & Easton in Gordano Parish Council Charter Trustees of the City of Bath Portishead Town CouncilClevedon Town Council Radstock Town CouncilCongresbury Parish Council Saltford Parish CouncilDestination Bristol Sodbury Parish CouncilDodington Parish Council Stoke Gifford Parish CouncilDownend and Bromley Heath Parish Council Stoke Lodge & the Common Parish Council


Emersons Green Town Council Thornbury Town CouncilFilton Town Council Visit Bath LtdFrampton Cotterell Parish Council Westerleigh Parish CouncilHanham Abbots Parish Council Westfield Parish Council Hanham Parish Council Weston Super Mare Town CouncilKeynsham Town Council Whitchurch Parish CouncilMidsomer Norton Town Council Winterbourne Parish CouncilNailsea Town Council Yate Town CouncilOldland Parish Council Yatton Parish Council

Community Admission Bodies Adoption West Sirona Care & Health CIC (2017)Alliance Homes Southwest Grid for Learning TrustAshley House Hostel The Care Quality CommissionBristol Music Trust The Holburne MuseumClifton Suspension Bridge Trust The Park Community Trust LtdDisability Equality Forum University of BathLearning Partnership West Ltd Vision North Somerset CIOMerlin Housing Society Ltd (New staff since 2007) West of England Sport Trust (WESPORT)Merlin Housing Society Ltd (SG) Writhlington Trust

Transferees Admitted Bodies ABM Catering LimitedActive Community Engagement LtdAgilisys LimitedAgilysis Limited 2015Alliance in Partnership Limited - Westbury on Trym C of E AcademyAlliance Living Care LimitedAspens Services Limited - Abbeywood Community SchoolAspens Services Limited - Bannerman Road Community AcademyAspens Services Limited - Barrs Court Primary SchoolAspens Services Limited - Beacons Rise Primary SchoolAspens Services Limited - Begbrook Primary AcademyAspens Services Limited - Bishop Sutton & Stanton Drew Schools (Federated)Aspens Services Limited - Blackhorse Primary SchoolAspens Services Limited - Bradley Stoke Community SchoolAspens Services Limited - Castle Primary School (Keynsham)Aspens Services Limited - Castle School Education TrustAspens Services Limited - Charborough Primary SchoolAspens Services Limited - Charfield SchoolAspens Services Limited - Cherry Garden Primary SchoolAspens Services Limited - Christchurch Hanham CofE Primary SchoolAspens Services Limited - Culverhill SchoolAspens Services Limited - Downend SchoolAspens Services Limited - East Harptree Primary SchoolAspens Services Limited - Frampton Cottrell SchoolAspens Services Limited - Frome Vale AcademyAspens Services Limited - Hanham Abbotts Junior SchoolAspens Services Limited - Hanham Woods Academy


Aspens Services Limited - Kings' Forest Primary SchoolAspens Services Limited - King's Oak AcademyAspens Services Limited - Longwell Green Primary SchoolAspens Services Limited - Mangotsfield SchoolAspens Services Limited - Marlwood SchoolAspens Services Limited - Meadowbrook Primary SchoolAspens Services Limited - Minerva AcademyAspens Services Limited - New Horizons Learning CentreAspens Services Limited - Patchway Community CollegeAspens Services Limited - Redland Green AcademyAspens Services Limited - Shirehampton Primary SchoolAspens Services Limited - St Barnabus CofE Primary SchoolAspens Services Limited - Staple Hill Primary SchoolAspens Services Limited - Stoke Lodge and CallicroftAspens Services Limited - Summerhill AcademyAspens Services Limited - The Tynings SchoolAspens Services Limited - Ubley Primary SchoolAspens Services Limited - Warmley Park Primary SchoolAtegi limitedBAM Construct UK Ltd Bespoke Cleaning Services Limited - Castle School Education Trust (CSET)Bespoke Cleaning Services Limited - Olympus Academy Trust (OAT)Churchill Contract Services Ltd - Cabot Learning FederationChurchill Contract Services Ltd - Golden Valley Primary SchoolChurchill Contract Services Ltd - South Gloucestershire & Stroud CollegeChurchill Contract Services Ltd - Westhaven SchoolCircadian Trust Compass Contract Services (UK) Ltd - Ashton Park SchoolCompass Contract Services (UK) Ltd - Bristol Cathedral Choir SchoolCompass Contract Services (UK) Ltd - Bristol City CouncilCompass Contract Services (UK) Ltd - Cathedral Schools Trust (BCCfw)Compass Contract Services (UK) Ltd - Diocese of Bristol Academies Trust (BCCfw)Compass Contract Services (UK) Ltd - Luckwell Primary SchoolCompass Contract Services (UK) Ltd - Palladian Academy TrustCompass Contract Services (UK) Ltd - South Gloucestershire and Stroud CollegeCompass Contract Services (UK) Ltd - St Bede's Academy (BCCfw)Compass Contract Services (UK) Ltd - St Patrick's Catholic Primary School (BCCfw)Compass Contract Services (UK) Ltd - St Teresa's Catholic Primary School (BCCfw)Compass Contract Services (UK) Ltd - Westbury Park Primary School (BCCfw)Creative Youth NetworkDirect Cleaning Services (South West) Limited - Newbridge Primary SchoolDolce Ltd - Filton Hill Primary SchoolDolce Ltd - Mangotsfield C of E Primary School Edwards and Ward Ltd - Bath & Wells MATEdwards and Ward Ltd - Chew Stoke Primary AcademyEdwards and Ward Ltd - Henleaze AcademyEdwards and Ward Ltd - Paulton Infant SchoolEdwards and Ward Ltd - Pensford Primary School


Edwards and Ward Ltd - St Keyna Primary SchoolEdwards and Ward Ltd - St Mark's CofE Secondary SchoolEdwards and Ward Ltd - Twerton Infant School & NurseryFit For Sport - St Peter’s C of E Primary SchoolFuture Cleaning Services Limited - Ashton Park SchoolFuture Stars Club LimitedGlen Cleaning Company LimitedGreenwich Leisure Ltd - Bath & North East Somerset CouncilGreenwich Leisure Ltd - North Somerset Council Lex Leisure C.I.C.Liberata UK LtdMentoring Plus Bath & North East Somerset Notaro Homecare LimitedPrestige Cleaning & Maintenance LimitedRelyon Cleaning Services - Cotham Gardens Primary SchoolRidge Crest Cleaning Ltd - Bristol City CouncilRidge Crest Cleaning Ltd - Sir Bernard Lovell SchoolShaw Healthcare - The GranarySITA Holdings UK LtdSkanska Rashleigh Weatherfoil LtdSLM Community Leisure TrustSLM Fitness & Health LtdSodexo LtdTaylor Shaw LimitedThe Brandon TrustVirgin Care Services Limited


Bath & North East Somerset Council’s responsibilities

The Council is required to:

• Make arrangements for the proper administration of the financial affairs of the Avon Pension Fund and to secure that one of its officers has the responsibility for the administration of those affairs. The Council has made the Director of Finance responsible for financial administration.

• Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.• Approve the statement of accounts for the year

Strategic Director – Resources responsibilities

The Director of Finance is responsible for the preparation of the Avon Pension Fund’s Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom.

In preparing this Statement of Accounts, the Strategic Director – Resources has:

• selected suitable accounting policies and then applied them consistently;• made judgements which were reasonable and prudent;• complied with the Code of Practice.

the Director of Finance has also:

• Kept proper and up-to-date accounting records;• Taken reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of the Strategic Director – Resources

I hereby certify that this statement of accounts presents a true and fair view of the financial position of the Avon Pension Fund at the accounting date and the income and expenditure for the year ended 31 March 2019.

Donna Parham

Director of Finance - Resources (S151 Officer)July 2019

Statement of Responsibilities for the Avon Pension Fund Accounts


Independent Auditor’s Report to the Members of Bath & North East Somerset Council

Independent auditor’s report to the members of Bath & North East Somerset Council on the consistency of the pension fund financial statements of Avon Pension Fund included in the Pension Fund Annual Report

Opinion

The financial statements of Avon Pension Fund (the “Pension Fund”) administered by Bath & North East Somerset Council (the “Authority”) for the year ended 31 March 2019 which comprise the Fund Account, the Net Assets Statement and the notes to the pension fund financial statements, including a summary of significant accounting policies are derived from the audited pension fund financial statements for the year ended 31 March 2019 included in the Authority’s Statement of Accounts (the “Statement of Accounts”).

In our opinion, the accompanying pension fund financial statements are consistent, in all material respects, with the audited financial statements in accordance with proper practices as defined in the CIPFA/LASAAC code of practice on local authority accounting in the United Kingdom 2018/19 and applicable law.

Pension Fund Annual Report - Pension fund financial statements

The Pension Fund Annual Report and the pension fund financial statements do not reflect the effects of events that occurred subsequent to the date of our report on the Statement of Accounts. Reading the pension fund financial statements and the auditor’s report thereon is not a substitute for reading the audited Statement of Accounts and the auditor’s report thereon.

The audited financial statements and our Report thereon

We expressed an unmodified audit opinion on the pension fund financial statements in the Statement of Accounts in our report 30 July 2019.

Director of Finance’s responsibilities for the pension fund financial statements in the Pension Fund Annual Report

Under the Local Government Pension Scheme Regulations 2013 the Director of Finance of the Authority is responsible for the preparation of the pension fund financial statements, which must include the Fund Account, the Net Asset Statement and supporting notes and disclosures prepared in accordance with proper practices. Proper practices for the pension fund financial statements in both the Statement of Accounts and the Pension Fund Annual Report are set out in the CIPFA/LASAAC code of practice on local authority accounting in the United Kingdom 2018/19.

Auditor’s responsibility

Our responsibility is to express an opinion on whether the pension fund financial statements in the Pension Fund Annual Report are consistent, in all material respects, with the audited pension fund financial statements in the Statement of Accounts based on our procedures, which were conducted in accordance with International Standard on Auditing 810 (Revised), Engagements to Report on Summary Financial Statements.

Use of our report

This report is made solely to the members of the Authority, as a body, in accordance with Part 5 paragraph 20(5) of the Local Audit and Accountability Act 2014 and as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the Authority’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Peter Barber

Peter Barber, Key Audit Partnerfor and on behalf of Grant Thornton UK LLP, Local AuditorBristol

14 October 2019


Summary of Financial Statistics

Year Ended 31 March 2019 2018 2017 2016 2015Revenue Account £’m £’m £’m £’m £’mIncomeNet Contributions 153.9 224.8 146.3 143.6 202.1Investment Income 37.0 28.0 29.4 24.4 28.1 Net Cash Transfer -0.7 0.7 -1.8 -3.7 -0.2Total 190.2 253.5 173.9 164.3 230.0

ExpenditurePension & Benefits 171.9 163.0 159.8 155.3 157.1 Investment Management Expenses 19.3 23.1 21.4 18.8 17.6 Administration Costs 3.5 3.3 3.1 2.6 2.3 Total 194.7 189.4 184.3 176.7 177.0

Surplus for the Year -4.5 64.1 -10.4 -12.4 53.0 Revaluation of Investments 221.4 183.0 627.2 -85.5 435.6

Change in Fund Value 216.9 247.1 616.8 -97.9 488.6 Total Fund Value 4817.8 4600.9 4,353.8 3,736.9 3,834.8

Investment management Expenses and the Revaluation of Investments have been restated to include transaction costs in compliance with the CIPFA’s Accounting for local Government Pension Scheme Costs.

Analysis of the Fund’s Investment Assets

UK Non-UK Global Total£’m £’m £’m £’m

Equities 385 239 1,383 2,007 Bonds 86 - - 86 Property 228 - 201 429 Alternatives 606 - 830 1,436 Infrastructure - - 343 343 Cash 70 - 38 109 Other - - 410 410 Total 1,375 239 3,205 4,820


Analysis of investment income accrued during the reporting period

UK Non-UK Global Total£’m £’m £’m £’m

Equities 11.2 7.8 19.0 Bonds - Property 7.5 5.5 13.0 Alternatives 3.1 3.1 Infrastructure - Cash 0.9 0.0 0.9 Other 0.0 1.0 1.0 Total 19.6 - 17.4 37.0

Costs to the Fund Budget v Outturn report on the costs to the Fund

Budget Budget Actual Budget Actual2019/20 2018/19 2018/19 2017/18 2017/18

Administrative Costs £’m £’m £’m £’m £’mManagement Costs 1.8 1.5 1.5 1.3 1.2 Administration and Processing 0.7 0.5 0.4 0.7 0.6 Service from Administering Body 0.5 0.5 0.5 0.5 0.5 Fees and income -0.2 -0.2 -0.2 -0.2 -0.4

2.8 2.3 2.2 2.3 1.9

Investment Management ExpensesFund Manager Base Fees 20.9 20.6 20.5 20.1 19.4 Custody & Transaction costs 0.0 0.2 0.2 0.1 0.1

20.9 20.8 20.7 20.2 19.5

Oversight and Governance costsManagement Costs 0.7 0.6 0.5 0.6 0.5 Specialist advice and Governance 1.5 1.1 1.1 1.0 1.2 Actuarial recharges -0.2 -0.3 -0.3 -0.3 -0.3 Audit fees 0.0 0.1 0.0 0.0 0.0

2.0 1.5 1.3 1.3 1.4

Total 25.7 24.6 24.2 23.8 22.8

Figures do not include investment transaction costs that are deducted at source or performance fees that relate to previous years. Budget figures include any adjustments made during the year.


Fund cash flow

Full year 2018/19Forecast Per Service Plan Out-turn

Outflows £’000 £’000Benefits Pensions (141,059) (146,098)Administration and Processing Lump sums (26,546) (25,764)Administration costs (10,326) (10,753)Total Outflows (177,932) (182,616)

InflowsDeficit recovery 16,836 14,968 Future service Contributions 135,484 138,303 Total Contributions 152,320 153,271

Net Cash Flow (excluding Investment Income and Transfers) (25,611) (29,344)

Net Transfers In & Out (budgetted as zero) - 1,415 Investment income received as cash 26,000 35,000 Net Cash In-Flow (Out-Flow) 389 4,241

The variation of £3.8m was due to a combination of factors. The largest of which being higher pension benefits payments than were expected and higher net transfers out. These were partly offset by higher than forecast contri-butions. Over all these factors resulted in a net outflow of £3.3m more than forecast. This variance was managed by increasing the forecast Divestments and income received as cash by £9.0m, leaving a net cash inflow of £4.2m to be carried forward in to 2019/20.

Late payers

Timeliness Analysis of Contributions Payments

£’000Total Contributions due in year 153,929

Total contributions received late by: £’0001 day 1

2 days 118 3 days 1

Over 3 days 254 Total Contributions 375

Percentage of contributions received late 0.24%

Regulations permit the Fund to charge interest on contributions that are paid over one month late at 1% above base rate. No such interest was charged during the year.


Pension Increase

Deferred Pensions & Pensions in Payment

Deferred pensions and pensions in payment are increased each year in line with the annual Statutory Pensions Increase (Review) Orders. This is currently based on the change in the published Consumer Price Index (CPI) for the 12 months to 30 September of the previous year. The full increase for 2018/19, which came into effect from the first Monday following the new tax year on 8 April 2019, was 2.4%. The full increase for the previous year 2017/18, which came into effect from 9 April 2018, was 3.0%.

Active Members - CARE Pension Accounts

Career average pensions that have been built up by active fund members since 1 April 2018, including any previously revalued CARE benefits brought forward from previous CARE years since 1 April 2014, are also subject to annual increases. These increases are in line with the Public Service Pensions Revaluation Orders which are also currently based on CPI for the 12 months to 30 September of the previous year. The full increase for 2018/19, which came into effect from 1 April 2019 was 2.4%, with the full increase for the previous year 2017/18, which came into effect from 1 April 2018, being 3.0%.

The State Guaranteed Minimum Pension (GMP)

The Fund is not normally responsible for any increases to GMPs accrued before 6 April 1988 or any increases, above 3%, for GMPs accrued after 5 April 1988; these increases are usually paid by the State as part of the State Pension.

However, on 6th April 2016 the Government introduced a new Single State Pension and as a result there is no longer a second state pension and therefore contracting-out ceased. As a consequence HM Treasury introduced an interim solution to indexation of GMPs. The implications are that the Fund became responsible for paying the full pensions increase on all of the GMP for any scheme member who reached their State Pension Age (SPA) between 6th April 2016 and 5th December 2018 inclusive. This interim measure has further been extended to include members who reach their SPA up to 5 April 2021.

The full implications, for the LGPS, have still not been fully decided. There are two working parties covering all public sector pension schemes currently involved with HM Treasury who are deciding on the way forward.


For further information on investments, accounts, benefits and administration of the Avon Pension Fund email us at: [email protected]

Or you can write to us at:Avon Pension Fund, Bath and North East Somerset CouncilLewis HouseManvers StreetBathBA1 1JG

Telephone: 01225 395100Fax: 01225 395258

General information about the Avon Pension Fund can be found at: www.avonpensionfund.org.uk

Contacts


Actuary: An independent consultant who advises the Fund and reviews the financial position of the Fund every three years. The Actuary produces a report, known as the actuarial valuation report, which compares the Fund’s assets with its liabilities and prescribes the rates at which the employing bodies must contribute.

Brunel Pension Partnership: A partnership of 10 LGPS funds who pool the management of their investment assets. The individual funds will retain responsibility for setting investment strategy; Brunel Pension Partnership Ltd., a company owned by the 10 administering authorities implements the strategies on behalf of the funds. The funds in the partnership are: Avon, Buckinghamshire, Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset and Wiltshire.

Consumer Price Index (CPI): CPI is a measure of inflation based on the change in the price of a fixed basket of goods and services. The difference between CPI and Retail Price Index (RPI) is that CPI excludes some items used in RPI such as mortgage interest payments and Council Tax, and includes other items not used in RPI.

Community Admission Bodies: Bodies, which either have sufficient links with a Scheme employer, and provides a public service in the United Kingdom otherwise than for the purposes of gain or are approved by the Secretary of State for the purposes of admission to the Scheme; a body, other than the governors or managers of a voluntary school, to the funds of which a Scheme employer contributes. Such a body can become a member of the Avon Pension Fund subject to Pension Committee approval.

Corporate Bonds: Fixed interest securities and index-linked securities issued by companies registered either in the UK or overseas. They represent ‘loans’ to the companies which are repayable on a stated future date (for definitions of “fixed interest” and “index-linked” see ‘Fixed Interest Government Securities’ and ‘Index-linked Government Securities’). In the annual accounts, these are included in ‘Sterling Bonds’.

Deferred Pension: The pension benefit held in the Fund for a member who has ceased to contribute as a result of leaving employment or opting out of the pension scheme before retirement age. A deferred pension may be claimed at any time between the ages of 55 and 75, but will be reduced if paid before the member’s Normal Pension Age or increased if paid after.

Equities: Ordinary shares in UK and Overseas companies traded on a recognised stock exchange. Shareholders have an interest in the profits of the company and are entitled to vote at shareholders’ meetings.

Fund Benchmark: The Fund benchmark reflects the asset mix determined by the Fund. It is expressed in terms of asset proportions and market indices (e.g. 45% UK Equities invested in the FTSE-Actuaries All Share Index). On this basis a benchmark return can be calculated. The significance of this benchmark is that it represents “normal fund policy”.

Guaranteed Minimum Pension: The LGPS guarantees to pay you a pension that is at least as high as you would have earned had you not been contracted out of the State Earning Related Pension Scheme (SERPS) at any time between 6 April

1978 and 5 April 1997. This is called the Guaranteed Minimum Pension (GMP).

Hedge Funds: Also known as “absolute return funds’, these funds have as their objective a performance target expressed as a margin above the return which can be achieved on cash deposits. The advantage of these funds is that they should achieve a positive return even when the stock market falls.

Independent Members: Voting members of the Avon Pension Fund Committee who are not councillors and who have no political attachments. There are three such members on the Committee, appointed principally because of the financial/investment expertise which they have acquired in the course of their professional careers.

Indexed-Linked Government Securities: Investments in government stocks (UK and overseas) where both the annual interest payment and the capital sum repayable by the government are adjusted to allow for inflation. Investments in government which are repayable on a stated future date.

Liability Risk Management Framework: An approach to investing which seeks to match the cashflows generated by the pension payments in the future, by increasing the exposure to the factors that determine the value of those payments, namely market derived bond yields and inflation expectations. Physical instruments, such as index linked bonds, or synthetic instruments, such as derivatives, can be used when implementing the strategy.

Local Government: The term local government in this document also covers police and fire civilian

Glossary of Terms


staff, a coroner, civil servants engaged in probation provision, a Mayoral development corporation, a conservation board, a valuation tribunal, a passenger transport authority, the Environment Agency, and non-teaching employees of an Academy employer, an Education Action Forum, a sixth form college corporation or a Further or Higher Education Corporation

Market Value: The price at which an investment can be bought or sold at a given date.

Passive Investing (Indexation): An investment strategy whereby the manager replicates an index in order to generate a rate of return in line with the index. The manager has no discretion over stock selection within the index. If it is a multi-asset portfolio, the asset proportions are prescribed within the mandate.

Pension Account: Each scheme year the amount of pension you have built up during the year is worked out and this amount is added to your active pension account.

Pooled Funds: Pooled Funds are funds which manage the investments of more than one investor on a collective basis. Each investor is allocated units in the fund which are revalued at regular intervals. Income from these investments is normally reinvested in the pooled fund automatically which increases the value of the units.

Retail Price Index (RPI): A measure of the general level of inflation based on the change in the price of a fixed basket of goods and services, such as food, energy, petrol, travelling costs, mortgage interest payments and Council Tax.

Transferee Admission Bodies (Scope Body): A body that provides, by means of a contract, a service

in connection with the exercise of a function of a Scheme employer, can become an admitted body within the Avon Pension Fund. The Scheme Employer transferring, must act as guarantor for such bodies.

A full A-Z of pension terminology can be found at http://www.avonpensionfund.org.uk/glossary


Appendices

Appendix A - Terms of Reference for the Avon Pension Fund Committee and Investment Panelhttp://www.avonpensionfund.org.uk/finance-and-investments

Appendix B - Governance Compliance Statement http://www.avonpensionfund.org.uk/finance-and-investments

Appendix C - Statement of Investment principles http://www.avonpensionfund.org.uk/finance-and-investments

Appendix D - Communications Policy http://www.avonpensionfund.org.uk/pensions-administration

Appendix E - Funding Strategy Statementhttp://www.avonpensionfund.org.uk/finance-and-investments

Appendix F - Administration Strategy 2015http://www.avonpensionfund.org.uk/pensions-administration

Appendix G - Service Plan 2019 - 2022http://www.avonpensionfund.org.uk/pensions-administration

Appendix H - Avon Pension Fund Pension Board Annual Report 2017http://www.avonpensionfund.org.uk/pension-board


Notes

INTENTIONALLY LEFT BLANK

Alternative FormatsThis document can be made available in arange of community languages, large print,Braille, on tape, electronic and accessibleformats, to request an alternative versionplease contact the Avon Pension Fund using the details provided.

AVON PENSION FUNDBath and North East Somerset CouncilLewis HouseManvers StreetBathBA1 1JG

Tel: 01225 39 5100Fax: 01225 39 5258Email: [email protected]: www.avonpensionfund.org.uk

Prepared by Avon Pension Fund

avon pension fund annual report 2018/2019 · avon pension fund annual report 201819 3. review of...

Documents